You may have been all caught up in the looming "sitmulus plan" news that you may not have heard of a recent vote that took place in the House Judiciary Committee.

This vote could potentially reduce foreclosure nation wide but, at what cost?

Basically, the bill lets Bankruptcy Judges alter the term of mortgage loans. The vote passed 21-15 and now the measure is headed to the House.

Now, one thing to remember about this bill is that it only applies to mortgages that were entered into before the bill becomes law. This is important becuase opponets of this bill claim this measure would create a rash of bankruptcies and flood the courts, much like the massive bankruptcy law changes of a few years ago.

The thought is that many people would be more comfortable with pleading thier case to a Judge than to deal directly with a Loss Mitigation Officer representing the bank because they feel the Judges will be more sympathetic to thier cause.

Well, of course many lenders oppose the deal because they believe they will be big loosers if these mortgages get in the hands of liberal Judges who like to legislate from the bench. Ultimately this is the one point both the default home owners and lenders agree on and that is, if a Judge is allowed to alter the terms of these loans, most likely they will favor the default homeowners and the banks will end up loosing more than they would have by doing a Short Sale or Foreclosure.

As you can imagine, the lenders are coming out and saying that massive losses incurred from these lawsuits will be passed on to new mortgage seekers and therefore, reduce the number of people able to afford a loan all together.