Page 3 - John Hundley 2009

New Developments Update

Sharp Thinking

No. 17 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. February 2009

President Backs Mortgage “Cramdown” Proposal . . .

President Barack Obama has signaled support for proposed mortgage-reform “cramdown” amend-
ments to the Bankruptcy Code.

Announcing his $75-billion “Homeowner Affordability & Stability Plan” Feb. 18, Obama
said his administration “will continue to support reforming our bankruptcy rules so that we
allow judges to reduce home mortgages on primary residences to their fair market value –
as long as borrowers pay their debts under court-ordered plans”. However, his remarks
were silent on whether the administration would back other controversial aspects of the
proposed legislation, such as allowing bankruptcy courts to change interest rates and
extend repayment periods. See “Bankruptcy Bill Will Drastically Affect Mortgage Lending
and Foreclosure”, Sharp Thinking #16, Jan. 2009.

Moreover, large portions of the President’s
remarks and of the White House releases on the Special Update Issue
plan focused on out-of-bankruptcy mortgage From its inception Sharp Thinking has aimed to report on
reform, an aspect which may impact bankruptcy developments in the law. As that goal recognizes, the law is
practice significantly. Critics have said the bank- not static – and no matter how thorough and perceptive an
analysis may be, it cannot stop further development.
ruptcy proposals could drastically increase con-
sumer bankruptcies if debtors could obtain relief In Sharp Thinking’s brief history, we have seen further
in bankruptcy that they could not obtain other- developments in a number of areas already covered – devel-
opments which individually do not justify another issue on a
wise. The plan outlined Feb. 18 includes sub- recently-covered topic, but of which we wanted to make you
sidies for mortgagees who agree to reform their aware. This issue provides such updates on several topics.
debtors’ existing mortgages and to bear parts of If an topic is of interest and you do not have the original
the resultant costs. issue to consult for reference, please request it by e-mailing
Making the announcement, the White House Sara@lotsharp.com. And if you have substantive comments
issued a press release with links to other or questions you wish to share, please contact the original-
issue author at the address listed at the bottom of the update.
materials prepared by the Treasury Department
and texts of the President’s remarks and of a press briefing by other administration officials. However, the
releases were not in the form of actual regulations or legislative bills. (www.whitehouse.gov/the_press_office/Remarks-
by-the-President-on-the-mortgage-crisis/; www.whitehouse.gov/the_press_office/Press-Briefing-with-Treasury-Secretary-Geithner-HUD-Secretary-
Donovan-and-FDIC-Chairman-Bair/; www.whitehouse.gov/blog/09/02/18/9-million-plus/).
Answers to expected “frequently asked questions” suggested debtors should contact lenders about
possible reforms “after the details of the program are announced on March 4”. Terry Sharp, law@lotsharp.com
“Name Game” Continues to Trap Unwary . . .

Lawyers who fail to pay attention to the proper names of their clients and opponents continue to result
in embarrassing court decisions. See “A. Rose By Any Other Name Is Not A. Rose,” Sharp Thinking #4,
Feb. 2008; “‘Know Thy Enemy and Know Thyself’,” Sharp Thinking #8, May 2008. In Bayview Loan Serv-

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal
advice on your particular situation, contact a Sharp lawyer at the phone number or one of the addresses provided on page 2 of this newsletter.