A bipartisan group of Representatives is planning to offer an amendment to the Wall Street reform bill being debated on December 9th that would allow bankruptcy judges to approve changes to mortgages on the family home.
Currently, lenders are protected from plan terms that change the terms of loans secured by personal residences. Judges can approve plans that modify secured debts on investment property, vacation homes, and commercial buildings, but not on the most important asset an individual has.
The amendment is identical to H.R. 1106, which passed the House last fall and was defeated by banking interests in the Senate. Well, banks are now profitable, the foreclosure contagion is spreading to prime loans, and the voluntary mortgage modification programs are laughably ineffective.
Nearly 8% of American home loans are delinquent, and 25 percent of homes are underwater. Without mortgage modification, I advise many clients to walk away from homes where the debt towers above the present value of the houses.
If some courage and vision can be found in Congress, maybe I’ll have another solution to offer. Contact your representatives and ask them to support the Conyers-Turner-Lofgren-Marshall amendment to H.R. 4173. Find your representative and their contact information.
