Home Mortgage Loans
While typically used in a corporate context, the phrase has gained currency in the context of personal bankruptcies as a result of the financial crisis of 2007-2009.
Under current United States law, bankruptcy courts are not allowed to perform cramdowns (i.e., reduce the principal amount or change the interest rate or other terms) on creditors who hold loans secured by mortgages on debtors' primary residences.
U.S. bankruptcy law provides for an automatic stay of any legal process against debtors or their assets (except perhaps legal process involving criminal law or family law) while bankruptcy is pending, but because U.S. bankruptcy courts cannot cram down loans secured by primary residences, creditors are able to file motions for relief from the stay. Once relief is granted, creditors may proceed with foreclosure immediately while debtors' other financial obligations await restructuring by the bankruptcy court. Debtors may eventually obtain discharges of their other debts, but by then, they may already have lost their homes.
Read more about this topic: Cram Down
Famous quotes containing the words home, mortgage and/or loans:
“We have not the motive to prepare ourselves for a “life-work” of teaching, of social work—we know that we would lay it down with hallelujah in the height of our success, to make a home for the right man. And all the time in the background of our consciousness rings the warning that perhaps the right man will never come. A great love is given to very few. Perhaps this make-shift time filler of a job is our life work after all.”
—Ruth Benedict (1887–1948)
“The mortgage is still in our name but, increasingly, the house is theirs. One diaper, one vote.”
—Fred G. Gosman (20th century)
“The contented and economically comfortable have a very discriminating view of government. Nobody is ever indignant about bailing out failed banks and failed savings and loans associations.... But when taxes must be paid for the lower middle class and poor, the government assumes an aspect of wickedness.”
—John Kenneth Galbraith (b. 1908)