Professor Mark Scarberry, whose major academic interest is bankruptcy law, lent his expertise to the National Law Journal for an article on possible implications of the bailout and the power of bankruptcy judges.
The article reported that the lending industry and debtor-homeowner advocates have faced off over the financial bailout proposal giving bankruptcy judges the power to "strip down" or modify home mortgages by reducing the amount of the debt to the fair market value of the property, if the property is worth less than the amount of the debt.
Professor Scarberry opposes the "strip-down" power. "If you have this write-down possibility, think of the people who will become even less able to get financing for a home," he says.
"People with low down payments and without real strong credit ratings and strong income they can verify--a lot of those folks shouldn't have gotten mortgages in the first place. But think of the person who is starting to do well, has a good job and not a long credit history, and who wants to buy a home. The write-down disproportionately affects lenders who take low down payments." Read the entire article here.
Scarberry's expertise includes both business and consumer bankruptcy. His scholarship includes the book Business Reorganization in Bankruptcy: Cases and Materials (now in its third edition) and a recent law review article for the ABI Law Review on the Supreme Court's decision in Travelers Casualty and Insurance of America v. Pacific Gas and Electric.