A new amendment could give bankruptcy judges the power to adjust mortgages on principal residences in addition to vacation homes and investment properties. In the simplest terms, homeowners could use bankruptcy to reduce their monthly mortgage payments, either the principal amount or their interest rate—even extend the repayment period of a mortgage.
The first incarnation of this bill flopped, having gone through the House with flying colors but failed to bulldoze through the Senate this past March 2009. At the time, it was supported by Democrats and President Obama to reestablish bankruptcy as a “last resort measure”, otherwise concerned that the epic foreclosure rates could lead to bankruptcies where the root mortgage problems were never successfully alleviated.
The mortgage cram-down bill is actively criticized for having unpredictable effects. The banking industry fiercely lobbies against it, rationalizing that the abundant investing in mortgages by outside parties could create an investment free for all.
Democrats avidly counter that the unpredictable effects of a cram-down cannot be much worse than having massive, widespread defaults across the country. After all, a staggering 2.6 trillion dollars of home values were lost during the sub-prime mortgage fallout where hundreds of thousands of people defaulted on unaffordable interest rates.
Individuals who file for bankruptcy due to a threatened foreclosure are almost directly affected by these measures. After all, bankruptcy is still the number one way to combat an impending foreclosure, but its effects don’t last forever; the mortgage is still due every month.
If you’d like to learn more about how mortgage cram down measures in bankruptcy could keep you from losing your home now or several years after your bankruptcy, call the qualified attorneys at Legal Helpers! We answer all bankruptcy information queries and provide free initial consultations. For answers from a legal professional, please call 1-800-260-1402.
Similar Posts:
- How The Credit Crunch Has Effected First Time Buyer Mortgages In The UK
- Chapter 13 Bankruptcy Time Bomb: Mortgage Modification
- The Latest on the Foreclosure Crisis
- FTC Halts Robocall Credit Card Scam
- Bankruptcy Lawyers Help Homeowners Erase Second Mortgages
