Mortgage modifications are desperately needed if we are to stop the cascade of home foreclosures. Exotic loans, adjusting interest rates, and dropping home values put millions of American homes at risk. Bankruptcy courts have their hands tied.
We’ve tried the voluntary programs, touted by the current administration; they have helped too few people and the modifications have been too timid.
Congress is considering a bill to change bankruptcy law to permit judges to approve modifications of loans on the borrower’s principal residence. Current law allows modification in bankruptcy of loans on everything but homes: If there ever was a reason for this exception, it is not relevant in today’s economic world.
This blog is a joint effort of two Northern California bankruptcy lawyers who see loan modification as the key to keeping families in their homes. My colleague and friend Doug Jacobs practices in the Eastern District of California and I practice in the San Francisco Bay Area.
We will follow the progress of the bill thorough Congress, comment on issues and unknowns, and lobby for approaches that we believe will help with the current financial crisis.
We hope to report on how the enacted bill works in bankruptcy courts in Northern California. We have more about the bills in Congress, just what they provide and links for our readers to contact their lawmakers and support this vitally necessary change to the law on our companion website at www.savehomewithbankruptcy.com.
Cathy Moran
