In Detail: Homeowner Affordability and Stability Plan
The Treasury released details about the Homeowner Affordability and Stability Plan, including a summary of the proposal to encourage mortgage modification and several illustrations about how the plan is designed to work and answers to potential questions. As outlined, the plan has three stated purposes: (1) to provide low-cost refinancing to homeowners now unable to refinance; (2) to create a $75 billion fund to aid loan modifications for homeowners now underwater on mortgages; and (3) to keep current mortgage rates low by providing additional support for Fannie Mae and Freddie Mac.
Not to be outdone, the White House unveiled its Financial Stability website and posted additional information about the plan on the White House blog.
One to Watch: Mortgage Cram-Downs Clear Committee
The House Judiciary Committee has approved H.R. 200, entitled the "Helping Families Save Their Homes in Bankruptcy Act of 2009." Judiciary Committee Chairman John Conyers issued a statement after the measure was approved.
The measure would amend bankruptcy laws for Chapter 13 debtors, excluding some mortgages from debt calculations, and allowing judge-imposed modifications to mortgages. Specifically, the measure would grant a judge the ability to modify the terms of a mortgage for a homeowner in chapter 13 bankruptcy, by: (1) reducing a claim to equal the value of the debtor's interest in the residence securing such claim, and any adjustments to a related adjustable rate of interest; (2) waiving early repayment or prepayment penalties; and (3) extending the repayment period.
California Holiday Statutes Preempted by OCC Regs
In Miller v. Bank of America, N.A. (USA), the Third District California Court of Appeal has held that California's holiday statutes, which extend the time to perform an act if the performance would fall on a holiday, does not extend the time for a credit card payment, because the holiday statutes are preempted by federal law.
In Miller, a putative class action, plaintiffs were credit card customers of Bank of America, a national bank. Plaintiffs alleged that so-called holiday statutes in California and Arizona prohibited Bank of America from charging late fees or interest on payments posted after a holiday, where the payment would not have been late absent the holiday. Plaintiffs alleged three violations of California Business and Professions Code §17200, one violation for each holiday statute at issue: California Civil Code §§9 and 11; and Arizona revised statutes §1-303. The trial court sustained Bank of America's demurrer without leave to amend, holding the holiday statutes are preempted by federal law. Plaintiffs appealed.
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