Bankruptcy judges would get new authority to  modify the  terms of a mortgage on a homeowners primary residence under legislation approved last week by the house Judicary commitee  to assist homeowners facing forclosure because of the recent sub prime mortgage crisis

 Under current law, bankruptcy judges are able to adjust terms of a loan only on second homes. H.R 3609 allows them to modify the mortgage for a primary  residence based on its actual value rather than an an inflated appraised price if the borrower show he or she is unable to make payments and the home is in the foreclosure process.

The bill is supported by a number of consumer groups including the center for responsible lending , as well as the governors of Ohio, MIchigan, Illinois and New Mexico. This bankruptcy change  could directly assist the more than 600,000 homeowners currently facing foreclosure and the two milliion homowners who will see there mortgage rates skyrocket over the next two years. In addition the bill  will encourage lending institutions to renegotiate the terms of loans that have become too costly for the homeownes to afford.

Filing for bankrupty is something that most people would not like to do, but the future may force some of those home owners who really want to save there home, and bankruptcy  may be an option that may be a consideration.