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CA Lawyer
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Category: Bankruptcy Law
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Experience:  Bankruptcy Attorney
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New cram Down law,

Resolved Question:

   From what I understand, the cram down law will help homeowners facing foreclosure by forcing the mortgage companies to come down to what the actual appraised value of the home is. If this is true, which appraised value is used? Would a current county appraisal be used, or would the mortgage company order a new one?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  CA Lawyer replied 7 years ago.
The potentially upcoming law would basically allow a bankruptcy judge to rewrite your mortgage.

The way it would work is that if you owe more than the home is worth, the judge could allow you to reduce the principal balance of the mortgage down to what it is worth, and you could also potentially reduce the interest rate as well, or set a fixed interest rate. This would have the corresponding affect of reducing your monthly payments.

That is the basic overview... did you have any particular questions about any particular aspects?
Customer: replied 7 years ago.
Thank you. Is there any guarantee that once the law is passed, a mortgage will be written down?

From what I have heard, the assessment value of the property will be a determining factor.
Expert:  CA Lawyer replied 7 years ago.
There isn't a guarantee, but it is something that you would be allowed to do as part of the bankruptcy.

The deciding factor would be the valuation. If the creditor objects and you could agree, this would have to be decided by an evidentiary hearing (mini trial) where each side of the dispute puts on testimony from an appraiser about the property value and the judge decides what the property is worth.

You might also ask your attorney whether you would have to pay for the appraisal (which is likely and could cost between $500 and $2000) and whether there are going to be additional attorneys fees if it proceeds to evidentiary hearing.

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