What is a "cram down"?
A cram down
is when a bankruptcy judge reduces the amount of a debt in a bankruptcy
proceeding, often at the objection of one or more creditors. Right
now, cram downs of mortgages on primary residences are not allowed in
federal bankruptcy cases but proposed legislation will make the
practice a legal remedy that judges can use to modify mortgages on a
primary residences.
If you have filed for bankruptcy contact your attorney and ask him
or her how the proposed regulations will affect your case.
"the
first offer they make, may only be designed to lock you into a longer
term loan often with teaser rates and negative amortization"
If you want to avoid bankruptcy and modify the mortgage
on your primary home, you may be able to ask your lender to change the
terms of your original note, Often they will flatly deny you if you
are not at least 60 day behind in payments. If they are interested in
a loan modification ,
the first offer they make, may only be designed to lock you into a
longer term loan often with teaser rates and negative amortization.
Many loan servicing companies, who collect payment and pass them on
to investors often have no incentive to modify loans and also risk
being sued by investors if they do. Before you agree to any
modification, have the documents reviewed by a loan modificaiton attorney .