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.

 
Posted by James Loftis on 12/20/2007 07:17 PM   Comments (3)   , ,  
Post is included in group: Short Sales
Post is included in group: RealEstateShortSales

3 Comments on Bankruptcy Judges may get power to Modify Mortgage Terms

I need to follow this legislation for several clients...if it passes, they will file

12/20/2007 07:23 PM by Ron Parise (LocateHomes.com)

I wrote a blog on this and I sure hope they pass it.  It just offers a little more help with the foreclosure problems that we are facing.  Thanks for bringing it back to life. Happy and Safe Holidays to you and your family.

12/20/2007 07:57 PM by Rosemary Brooks -Mother & Daughter (866)-750-8282 (Family Realty Group - 866-750-8282)

While I agree that changes need to be made I have some serious issues with the premise of most of the activities of the center for responsible lending. They are not a consumer support group--they are a lender hate group. Then again I'm from Georgia where we have limited YSP and total loan cost for many years. I hate for anyone to lose their home but for a judge to have the power to change the terms of a loan? No. No way. Perhaps demand the LENDER change the terms of the loan or risk taking back the house (news flash: most of them are willing to do this and have been doing so for years anyway). Changing the terms of the loan doesn't hurt most lenders--they sold the loan months ago. It hurts, for example, the Librarian's Union Retirement Fund who holds that note. The number one problem with government intervention is they usually don't do anything forward--it's all retrospect. I'm definitely following this resolution as well. Thanks for the post!

12/20/2007 08:13 PM by Novation Mortgage

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Real Estate Agent: James Loftis (Service First Realty Group)
James Loftis
Hollywood, FL
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