House bill would allow judges to adjust mortgages

By Kimberly Atkins

The Daily Record Newswire

A bill that would allow certain home mortgages to be modified by bankruptcy judges has been introduced in the House.

The Home Foreclosure Reduction Act of 2011, H.R. 1587, would, among other things, allow bankruptcy judges to adjust the amount of an underwater mortgage to the fair market value of the home. The change will encourage homeowners to make their mortgage payments and help stop the endless cycle of foreclosures further depressing home values, according to the bill's sponsor, Rep. John Conyers, Jr., D-Mich. Currently, mortgage modifications are done solely at the discretion of lenders.

''These are the very same lenders who are largely to blame for causing this crisis through their profligate lending practices,'' Conyers said in a statement announcing the introduction of the bill. ''It's therefore not the least bit surprising that these voluntary programs and initiatives have largely failed.''

The change would apply the same modification standards that govern other types of loans to mortgages.

''Under current law, virtually every other secured claim - except a home mortgage - may be judicially modified, including claims secured by vacation homes, family farms and investment properties in a bankruptcy case,'' Conyers said.

The measure would allow the repayment period of a mortgage to be extended so that monthly mortgage payments are more affordable. It would also allow high interest rates to be reduced to a level that will keep the mortgage affordable, and allow judges to waive prepayment penalties and excessive fees.

The legislation is identical to the ''Helping Families Save Their Homes Act,'' which was passed in the House in 2009, but later defeated in the Senate.

Published: Thu, May 12, 2011

Comments

  1. No comments
Sign in to post a comment »