Efforts by Congressional Democrats to allow judges to alter the terms of mortgages of homeowners in bankruptcy moved one step closer to passage today.
The House Judiciary Committee approved the bill today on a 17-15 vote, with one Republican voting in favor. The bill, H.R. 3778, is not expected to be taken up by the full House until after New Year’s. Prospects in the Senate are uncertain.
Relief would be available to people who file for Chapter 13 bankruptcy protection and cannot pay all their bills. Bankruptcy judges could change the terms of subprime loans and other non-traditional mortgages, like those that allow interest-only payments, that were taken out between Jan. 1, 2000 and the day the bill is enacted.
Under the bill, a judge could, among other things, lower the loan interest rate or modify the mortgage principal to reflect the home’s current fair market value. Lender’s fees also could be set aside.
Democrats and consumer advocates support the legislation, saying it could save the homes of as many as 600,000 people from foreclosure. Mortgage industry officials oppose the bill, arguing it will just make other loans more expensive as lenders try to recoup the costs of unpaid loan balances on mortgages modified in bankruptcy.
For an earlier story on the legislation, CLICK HERE.
To read the bill, CLICK HERE.
This, like the “bailout”, is incredibly stupid and will only make getting loans more difficult and more expensive for everyone. And investors won’t pay as much for loans knowing that terms can now be modified by everyone except the mailman. This country is run by a bunch of morons!
http://www.ronpaul2008.com. You do not need to like the man, you will find passion for the platform.
Well said, Doug … Ron Paul ‘08.
I in no way support any subsidies for banks, but homeowners need to honor their contracts, unless someone had a gun to there head while signing (literally!). The government’s role through the courts is to enforce contracts, not for Congress to change existing contracts. Changing the principal balance is absurd! An investment losing value should fall on the investor, just like a rising value should reward the investor. This is a moral hazard.
http://www.solventproperty.com
http://www.investmentbinder.com/view-binder?id=kennycud
great so now when I go looking to buy a house I wont be able to afford it because of crap like this, this is almost as stupid as when Bush was re-elected
I think its a great idea. Forcing banks to suck up there own creation. it was the RE agents, lenders, brokers and other ilk that specked out everything and caused regulare people to have to TAKE it or get lost in the rising prices. most of us just wantd to own a home and not make our wealth off of RE. I think if all loans were adjusted back to the 2001 price and made the banks suck up the cost they would be more inclined to be conservative bankers verse greedy whores only caring about there xmas bonus.