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Interest rate truth below banker’s bluster

By Cathy Moran

Carmen Dellutri looked at the effect of the mortgage modification bill in Congress and the claims of bankers that interest rates will rise if bankruptcy judges can modify residential mortgages. He pointed out that the mortgage industry has not offered any proof that interest rates would rise.

Enter Prof. Adam Levitin. He has looked at data from a time when mortgages on a borrower’s principal residence could be modified in bankruptcy. Guess what he found? The risk of judicial modification made no discernible difference in interest rates.

So perhaps there is a very good reason, Carmen, that the bankers offer no proof to back up their scare mongering. Perhaps, there is no such evidence.

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About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

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You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

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