Congress Tries to Help Drowning Homeowners

Homeowners who risk losing their home in foreclosure now have some hope. Congress is considering a bill to allow homeowners who file bankruptcy to modify or change the terms of their home mortgages the same way they can modify car loans and other secured debts through their Chapter 13 plan.
HR 3609 Emergency Home Ownership and Mortgage Equity Protection Act would change the current law which does not allow a residential mortgage to be modified in a Chapter 13 bankruptcy. The current law only acts as a temporary fix to allow homeowners to catch up the arrears through the Chapter 13 plan but it does nothing to change the payments on the mortgage. So, if a homeowner has been coerced into an adjustable rate mortgage and their payments have reset to an amount which they can’t afford, merely stopping a foreclosure and not addressing the high payments will only put them right back where they started from with the added burden of a bankruptcy on their credit report. The legislation can only help lenders because they will not be burdened with foreclosure fees and they would still be receiving what they would have gotten for the home at a foreclosure sale.
See the text of the bill here.
A second bill, H.R. 3915 Mortgage Reform and Anti-Predatory Lending Act of 2007, would establish common-sense standards to prevent the kind of reckless lending that took place in 2005-2006 and now has so many families in danger of losing their homes.
See the text of the bill here.

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