The Conyers/Turner/Lofgren amendment to allow modification of home mortgages in bankruptcy will reach the floor of the House perhaps as early as today.

You can use NACBA’s toll free phone number to find your Congressman and be automatically connected with the office.

Here’s how:

1. Phone toll free at: 877.354.4958

2. Put in your zip code

3. When you reach the receptionist:

• State your name
• Say that you are a constituent
• Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.
• This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure

We need an alternative to the farsical voluntary mortgage modification programs.  Speak up, today, for a meaningful alternative.

Legislation to allow bankruptcy judges to rewrite the terms of mortgages is being considered again in Washington.  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.  Such 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.

We need this legislation.  The voluntary modification programs have helped some, but not nearly enough, home-owners.   And then, only after many months of frustration.  Having an unbiased Bankruptcy Judge to mediate the process and structure a new home loan to help the home-owner will save thousands, if not tens of thousands, of homes from foreclosure!

The flurry of advertisements on the TV promoting people who promise loan modifications suggests that modifications are available if you just know how to do it right.

My experiences suggest that it isn’t so.  If there is a theme I hear in talking with clients who’ve sought loan modifications is that they can never get through on the phone and that paperwork submitted to lenders seems to be sucked into a black hole.  Again and again, they are told they haven’t provided the requested information or that what they’ve provided isn’t right.

Meanwhile, all kinds of folks offer to help homeowners with the process, for money up front.  Given the apparent success rate of getting modifications, they’d better get their money up front, because they are unlikely to produce a result deserving of compensation.

Word from Capitol Hill is that judicially supervised loan modification may reappear in the financial services bill to be introduced this fall.  Let’s hope that Congress can learn that voluntarism, in the context of mortgage modification, isn’t doing the job.

One of my clients actually was offered a loan modification, or rather a trial period in which he could send the lender money, after which they would consider offering him a modification.

I was to fax it to the lender after we had discussed the risks and rewards.  The offer, now signed by the client, had the fax number for the return of the agreement and a deadline of August 1.

I tried twice July 31 to fax it, and the fax machine on the lender’s end did not respond.  I tried twice on August 1:  same story;  I tried again on August 3rd, clearly now within business hours on the East Coast. No response.

My paraglegal had to call and get an alternative number to even get the client’s acceptance in the hands of the lender.  It doesn’t raise my confidence level about what’s going on at the lender’s end of this deal.

Nearly 3 million homeowners are eligible for the government sponsored loan modifications;  only 400,000 received a loan modification offer over the life of the  government program.

In the meantime, 1.5 million homeowners got a foreclosure notice in the first half of this year.

Lenders at the top of the list for percentage of eligible loans modified include Saxon Mortgage, JPMorgan Chase, GMAC and Auroa; each modified more than 20% of eligible loans.

Bank of America, Select Portfolio, Ocwen and Wachovia modified five percent or less, according to an AP story in the San Jose Mercury.

My clients listen to the ads on radio and TV and think that modifications are widely available and actually happening. That isn’t my experience.  This report suggests that a lot depends on who is servicing the loan at this point.

We need to revisit judicially supervised loan modification before it gets any later.