Mortgage Modification Bill Back on Track

Legislation to allow bankruptcy judges to rewrite the terms of mortgages is being considered again in Washington according to an article in the Wall Street Journal. Senate House Financial Services Chairman, Barney Frank (D., Mass.), is planning on attached such a bill to a financial regulatory overhaul scheduled to be introduced later this year or early in 2010.   This legislation passed the House last spring, but was shut down in the Senate.

Such legislation will mean that a homeowner, seriously behind in her house payments, could seek refuge in a Chapter 13 bankruptcy and apply to the judge to have her mortgage “re-written.”  This could, depending on the specifics of each case, allow a reduction in principal to be paid, lower the interest rate on the loan and extend the term of repayment.

Curiously enough, Mr. Frank notes that the best chance to have new bankruptcy legislation passed is because the mortgage servicers are doing such a lousy job of the voluntary mortgage modification programs.

Related posts:

1. Emergency House Bill Saves Home Mortgages
2. Credit Suissse Says Mortgage Modification Bill would cut foreclosures by 20%
3. Senate Bill 61 Does Not Pass Into Law: No Bankruptcy Mortgage Modification Yet