Florida Bankruptcy Judge Questions Judgment Of Lenders Opposing Proposed Loan Modification Legislation

In Miami, Florida, the Miami Daily Business Review reports:

• U.S. Bankruptcy Judge A. Jay Cristol said the banking and mortgage lending industry is either greedy, stupid or both when it comes to opposing legislation that would allow mortgage modifications for homeowners who declare Chapter 13 bankruptcy. “Everyone’s best interest would be served by stabilizing the situation and keeping people in their homes,” said Cristol, chief judge emeritus of U.S. Bankruptcy Court in Miami.

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• “Unfortunately, because of lack of wisdom or greed, the banks are not acting in their own best interest. It’s in the whole country’s best interest to modify these mortgages,” Cristol said.

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• The new legislation also could take the teeth out of criminal loan-modification businesses preying on homeowners desperate to stay in their homes. Florida Attorney General Bill McCollum issued a consumer advisory last month saying foreclosure rescue services were the most frequent subject of complaints in 2008, defrauding hundreds of homeowners out of millions of dollars.

• Cristol said it’s unknown what impact the modification measure would have on what he called “the creatures out at the edge of the herd, looking for the wounded and disabled.”

For more, see Loan modifications for homeowners in bankruptcy opposed by lenders.