A compromise was reached on House Bill 1106- the Housing modification bill. Bankruptcy judges will still have the authority to modify a mortgage in a chapter 13 bankruptcy, but under more limited circumstances than as originally proposed.
The two most significant changes in the compromised package are that the “crawl back” provisions will last for four years. This is a clause in the legislation whereby a home owner, who has reduced her mortgage through a Chapter 13, and then sells her house for a profit, will have to repay some of that profit to the mortgage company that was forced to modify the mortgage.
The second major change is a restriction that would deny a modification through the bankruptcy court if the mortgage company had, outside of bankruptcy, offered a “reasonable” modification to the homeowner that was turned down.
The vote on this new bill may come as early as today.