Discussion~ House of Representatives 3609 Emergency Home Ownership and Mortage Equity Protection Act

In summary, from what I gleaned, the act will enable the bankruptcy courts to "MODIFY" the mortgage debt on PRIMARY residences. For example if the homeowner/borrower files for Chapter 13, under the 3609 bill, it is proposed that a judge can reduce the principal down to match the current market value, as well as "Modify" the interest rate downward as well, while allowing the ‘write down of debt' to become unsecured debt, which in turn is merely written off.

It seems like the bill is well intentioned, but this excessive regulation could cause further negative effects on real estate values.

Thoughts?  How do you feel about the Word "MODIFY"?

http://www.govtrack.us/congress/billtext.xpd?bill=h110-3609

H.R. 3609: Emergency Home Ownership and Mortgage Equity Protection Act of 2007

HR 3609 IH

110th CONGRESS

H. R. 3609

To amend title 11 of the United States Code with respect to modification of certain mortgages on principal residences, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

September 20, 2007

Mr. MILLER of North Carolina (for himself, Ms. LINDA T. SANCHEZ of California, Mr. FRANK of Massachusetts, Mrs. MALONEY of New York, and Mr. WATT) introduced the following bill; which was referred to the Committee on the Judiciary

HB BILL

To amend title 11 of the United States Code with respect to modification of certain mortgages on principal residences, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Emergency Home Ownership and Mortgage Equity Protection Act of 2007'.

SEC. 2. DETERMINATION OF SECURED STATUS.

Section 506(b) of title 11, the United States Code, is amended by adding at the end the following:

`While a case is pending, no fee, costs, or charges may be added to a debt that is provided for in a chapter 13 plan and is secured by the debtor's principal residence unless the holder of the secured claim gives timely notice of such fee, costs, or charge to the debtor and to the trustee.'.

SEC. 3. LIMITATION OF 1978 EXEMPTION THAT PREVENTS FEDERAL BANKRUPTCY COURTS FROM MAKING MODIFICATIONS TO THE TERMS OF A MORTGAGE ON A DEBTOR'S PRINCIPAL RESIDENCE.

Section 1322(b)(2) of title 11, United States Code, is amended by striking `, other than a claim secured only by a security interest in real property that is the debtor's principal residence,'.

SEC. 4. MODIFICATION OF CLAIMS SECURED BY DEBTOR'S PRINCIPAL RESIDENCE.

(a) Contents of Plan- Section 1322(b) of title 11, the United States Code, is amended--

(1) in paragraph (10) by striking `and' at the end,

(2) by redesignating paragraph (11) as paragraph (12), and

(3) by inserting after paragraph (10) the following:

`(11) provide for payment of allowed claims secured by the debtor's principal residence consistent with section 1325(a)(5), over a period exceeding the period permitted under section 1322(d); and'.

(b) Confirmation of Plan- Section 1325(b)(5) of title 11, the United States Code, is amended by inserting `except as otherwise provided in section 1322(b),' after `(5)'.

SEC. 5. ELIMINATION OF CREDIT COUNSELING REQUIREMENT FOR CHAPTER 13 DEBTORS FACING FORECLOSURE.

Section 109(h) of title 11, United States Code, is amended by adding at the end the following:

`(5) The requirements of paragraph (1) shall not apply with respect to a debtor in a case under chapter 13 who submits to the court a certification that the holder of a claim secured by the debtor's principal residence has initiated a judicial or non-judicial foreclosure on the debtor's principal residence.'.

SEC. 6. CONFIRMATION OF PLAN.

Section 1325(a) of title 11, the United States Code, is amended--

(1) in paragraph (8) by striking `and' at the end,

(2) in paragraph (9) by striking the period at the end and inserting `; and', and

(3) by inserting after paragraph (9) the following:

`(10) notwithstanding paragraph (5)(B)(i)(I), the holder of a claim that is paid pursuant to section 1322(b)(11) shall retain the lien securing such claim until payment of such claim.'.

SEC. 7. DISCHARGE.

Section 1328 of title 11, the United States Code, is amended--

(1) in subsection (a)--

(A) by inserting `(other than payments to holders of allowed claims provided for under section 1322(b)(11)' after `paid' the 1st place it appears, and

(B) in paragraph (1) by inserting `or 1322(b)(11)' after `1322(b)(5)', and

(2) in subsection (c)(1) by inserting `or 1322(b)(11)' after `1322(b)(5)'.