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The Senate Banking Committee is now looking at the “Helping Families Save Their Homes in Bankruptcy Act of 2009.”  Even though the House passed this legislation two weeks ago, the Senate has decided it needs more information; more “debate.”

The Banking Committee now has control over the bill and will argue its merits in the next week (or two or six…).  This is silly.  The Banking Committee isn’t the right venue to deal with the pros and cons of this bill. It should go to the Senate Judiciary Committee, if it needs to be further scrutinized.

The Senate Judiciary Committee normally analyzes bills amending Title 11 of the US Code (the Bankruptcy Act).  They have the knowledge and expertise to do so.  The Banking Committee usually looks at legislation aimed at regulating banks, credit unions and the like: not at bankruptcy legislation.

Although this doesn’t mean the end of this legislation, it will, no doubt, slow down passage and complicate the process as the committee struggles to understand the issues and approve the bill for vote by the Senate.

Time for us all to write our Senators and get this moving again.

New  programs from the Obama Treasury Department will help borrowers refinance or modify their loans without bankruptcy. The plan even gives people options if their economic situation gets worse.

With housing prices falling fast around the country, the San Francisco Bay Area has not seen prices fall like this for decades, families everywhere are feeling the credit crunch. The Obama Administration’s program to make homes affordable again seeks to limit the amount people spend on their home to 31% of their gross income by allowing those who qualify to modify their loans.

The plan helps even those who want to refinance to take advantage of historically low interest rates, but can’t because they don’t have enough equity. Now those qualified can refinance even if they owe 105% of the value of their home on their first mortgage.

Below is a chart of the qualifications for the various options and the incentives provided by each.**

This is only a summary and detailed information about each borrower is required to qualify for each of the program options. The precise details of the plan are available at www.FinancialStability.gov.

*** At the time of this posting, new bankruptcy legislation has passed one house of congress.

John L. Mlnarik,  an attorney in Santa Clara,California, authored this post. Contact him at john@mlnariklaw.com.

The complete announcement of President Obama’s housing assistance programs not involving bankruptcy can be found at FinancialStability.gov.  The site offers a self assessment tool so you can determine if you are eligible for the programs for loan modification or for refinance.

We will have an overview of these programs here soon.

The success of these programs which depend on lender cooperation will be strongly influenced by whether borrowers have an alternative route to mortgage modification in Chapter 13.  The Senate is expected to take up the Helping Families Save Their Homes Act this coming week.

Governor Schwarzenegger signed into law a 90-day moratorium on home foreclosures.  That’s great news for families struggling to keep their homes, but does it do enough?

A close examination of the law shows there are some significant loop holes for mortgage companies.  They don’t have to comply with the moratorium if they are offering modifications to home owners that meet certain criteria. .  According to some analysts, all that a lender needs to do is offer a deferment of some of the principal due until the end of the loan and a minimal interest rate decrease to qualify under the new act.  Once such a modification is offered, the lender can continue to foreclose regardless of this law.

Trusting lenders to “do the right thing” hasn’t worked very well to date.  Better to put the control in the hands of a neutral Bankruptcy Judge and allow a fair modification.  Tomorrow should be the vote on the “Helping Families Save Their Homes in Bankruptcy Act of 2009” by the House.  Keep your fingers crossed for passage, and fax you Representative.

There is a new foreclosure in the United States every 13 seconds according to a report by the Center for Responsible Lending. That number is staggering. So is the number of families that have lost their home since January 1, 2009 alone (365,000 and growing).

The Helping Families Save Their Homes in Bankruptcy Act is the only current legislation designed to slow this process.  The bill will be before the House of Representatives Thursday for a vote.  Call, fax or e-mail your congressperson to support it.  Click here to find your representative.

The Helping Families Save Their Homes in Bankruptcy Act is expected to come to the floor of the House as early as Wednesday February 25th. The bill will give bankruptcy judges the same power to modify mortages on family homes as they now have for vacation homes, apartment buildings, and commercial property.

The bill would give distressed homeowners a more even playing field to make payment arrangements that are viable over the long term, at no cost to the taxpayer.  There is no subsidy here, no incentive payments, no paying the bank’s losses.  Just a chance to put troubled loans back on track and to free the lenders from the  constraints imposed by mortgage securitization that current hinder meaningful modification outside of bankruptcy.

Pick up the phone right now and tell your Congressional representative that you support HR 200.  All you have to tell the Representative’s staff member is that you support the passage of HR 200 to help stop the housing decline.  If you are faced with foreclosure, share that fact.   Find the name and phone number of your representative at Save Home With Bankruptcy.

President Obama made a nice speech yesterday in Arizonian.  He spoke about the mortgage crisis and the need to help homeowner.  And he identified a new plan to do that.

The ideas presented focus on encouraging lenders to modify mortgages.  It sounded, to some extent, like the same old rhetoric: “the mortgage companies can voluntary work with home owners to reduce payments and interest rates.”  But looking more carefully, the President introduced a couple of new ideas into these programs.

Yes, the programs are still voluntary, but, in this plan there are actual economic incentives to the mortgage companies to work with homeowners.  Additionally, the Treasury Department will develop uniform guidelines for loan modifications, as well as require all financial institutions receiving government funds to participate in the program.   These are major incentive to get some help to homeowners.

And if those programs don’t work the plan still calls for legal changes to allow judges to modify mortgages during bankruptcy.  The “Helping Families Save Their Home in Bankruptcy Act of 2009” is still very much alive.