Bankruptcy Judges To Modify Mortgages?

SFL here, still foolin' around in the big house....

Mortgage crisis? Really, I hadn't noticed.

But apparently, I am advised, there may be some sort of problem:

President Obama’s proposal to address the rising tide of home foreclosures calls for legislation to allow bankruptcy judges under Chapter 13 to modify the terms of home mortgages when families run out of other options.

The legislation stalled in the House and the Senate for the past two years because of opposition by Republicans and the lending industry. But by 2012, one in every nine homeowners will have lost a home to foreclosure, according to a Credit Suisse Securities analysis. Has the foreclosure landscape changed sufficiently to break the back of the determined opposition?

I see some hotshot law professor from Yale thinks this is a bad idea:

First, the proposal would swamp bankruptcy courts. There are only about 300 bankruptcy judges, and they are already busy with an increasing number of bankruptcies. Clearing millions of new mortgage cases will take a long time and thus have little immediate effect on the foreclosure crisis. In addition, the flood of new cases would delay the resolution of business bankruptcies, to the detriment of the economy.

Professor -- have you been to state court recently? These cases have to be adjudicated somewhere -- why not put them in the hands of those who are expert at valuing assets and determining fair market value?

Also -- aren't there more bankruptcy judges than all federal district judges combined? It's actually 368, btw, but who's counting.....

And the "flooding" Professor Schwartz talks about is not likely to be a permanent condition, as the initial wave of cases is absorbed. Hey, this "scholar" even agrees with me:

But “a more neutral analysis of this is to think back to 2005, about the time bankruptcy law got changed,” said bankruptcy scholar Robert Lawless of the University of Illinois College of Law. “There were two million filings that year, and the system did handle those. There weren’t any reports of major problems.”

Well, there will likely be major problems no matter what we do, the question is which approach gets out of this situation faster and more efficiently.

Where is everyone?

On most days, you'll find a bunch of reporters in Judge Cooke's courtroom dutifully covering the Jose Padilla trial. Not today. Today, they were all in Bankruptcy Judge Cristol's courtroom for the O.J. book litigation. Here's the AP's Curt Anderson on what happened:

A federal bankruptcy judge Monday awarded the rights of O.J. Simpson's canceled "If I Did It" book to the family of the late Ronald Goldman to satisfy a $38 million wrongful death judgment against the former football star.
U.S. Bankruptcy Judge A. Jay Cristol's decision pushed aside complaints from the family of Simpson's ex-wife, Nicole Brown Simpson, who was slain along with her friend Goldman in a 1994 knife attack.

***

Fred Goldman, Ronald Goldman's father, choked back tears outside the courtroom and said he intends to release the book as a measure of justice to portray Simpson as "a wife-beater, as a murderer, written in his own words."
"After 13 years of trying to get some justice, today is probably the first time we had any sense of seeing light at the end of the tunnel," said Goldman, who attended the hearing with his daughter, Kim. "It's gratifying to see."
Lawyers for Brown's father, Louis Brown, objected to a settlement awarding the rights to Goldman.
The Browns wanted Cristol to give equal rights to all the creditors, rather than allowing the Goldmans to collect the lion's share of any profits from the book.

TMZ ordered to show cause...

...for posting the entire book IF I DID IT -- OJ's "fictional" account of the murders. Bankruptcy Judge A. Jay Cristol (pictured) had a hearing on the emergency motion today and ordered TMZ to show cause why he should not hold them in contempt. Here is trustee Drew Dillworth's* motion.

Some background from the Smoking Gun:

A court-appointed bankruptcy trustee wants a gossip web site held in contempt for its publication yesterday of the entire manuscript of "If I Did It," O.J. Simpson's purportedly fictionalized account of the murder of his ex-wife and a male friend. The "exclusive" posting of the 235-page book by TMZ.com came days after a federal judge ruled that the work's copyright can be pursued by the family of the late Ron Goldman, who was murdered along with Nicole Brown Simpson in June 1994 (Simpson was acquitted of the killings). According to an emergency motion by Drew Dillworth, the federal trustee, the web site's posting of the manuscript in a downloadable PDF format has likely "diminished or destroyed" the value of the book, which the Goldmans may eventually publish (and promote) as Simpson's confession.

*Disclosure: Drew Dillworth works at Stearns Weaver where my wife works.