Update from the Foreclosure-Based Economy 0
At MarketWatch, Richard Gibson reports on the double-standard that keeps the home foreclosure market healthy and creates jobs for process servers. A nugget:
The rest of the mortgage, the amount by which the mortgage exceeds the value of the property, can be “stripped down” under Bankruptcy Code Section 506, or converted into unsecured debt, which can be discharged. “Strip down” gives underwater commercial property owners a reasonable chance to reduce their debts, and to return to profitability.
(snip)
But homeowners cannot use strip down. Under bankruptcy law, the only mortgages that cannot be stripped down are those against the principal residences of individuals or families. Donald Trump can use strip down to reduce multimillion-dollar mortgages against his casinos. A middle-class family, however, can’t use strip-down to save their home from foreclosure.
