31 Jan 2009

Homeowners facing foreclosure may soon find real relief.

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In the wake of declining home values and rising foreclosures rates, two proposed bills, H.R. 200 (House of Representatives) and S.61 (Senate), may offer qualifying homeowners some real relief.  The legislation, entitled “Helping Families Save their Homes in Bankruptcy Act of 2009,” would amend key provisions of chapter 13 bankruptcy laws to permit the modification of certain mortgages.


Under current chapter 13 bankruptcy laws, homeowners have the ability to save their principal residence from foreclosure by proposing a plan to cure delinquent mortgage payments.  However, current law prohibits homeowners from proposing a plan that modifies the terms of their first mortgage (subordinate mortgages may be modified under certain circumstances).  In other words, homeowners may not reduce their regular monthly mortgage payments or convert an “adjustable-rate” mortgage to a “fixed-rate” mortgage.  The proposed legislation seeks to change that. 


If passed, eligible debtors may soon be able to propose major changes to their mortgage by reducing the outstanding balance to the fair market value of the home, converting an “adjustable-rate” to a “fixed-rate,” and/or lengthening the re-payment period. 


Monitor the progress of H.R. 200 here:




Monitor the progress of S.61 here: