The House of Representatives passed the bill to allow mortgage modifications yesterday, March 5, 2009, by a vote of 234-191.
If the Bill passes the Senate and becomes law, Bankruptcy Judges will be allowed to modify mortgages to reduce interest rates, modify the amount of the secured portion of the loan and even extend payments. Judges will also have to weigh a homeowner’s income against the payments needed to pay the loan and determine what an appropriate interest rate and/or principal reduction should be under federally approved guidelines.
This is the “Helping Families Save Their Homes in Bankruptcy Act of 2009” with several changes. Chief among them is a provision that requires home owners to seek a voluntary loan modification from their lender before the court can consider doing so.
The next step is to get a similar bill through the Senate and consolidate the two for signature by President Obama. He has promised to sign such legislation both during his campaign and in recent comments concerning the foreclosure crisis.