House Judiciary Committee Narrowly Passes Mortgage Relief Legislation
This week, the House Judiciary Committee passed legislation sponsored by John Conyers (D-MI) and Steve Chabot (R-OH) that would allow bankruptcy judges to modify some mortgages in chapter 13 bankruptcies. The highlight of the legislation which will now go to the full House for a vote is that chapter 13 would allow the debtor to lower both the principal balance on a mortgage and possibly the interest rate based on the value of the property. Thus, if a debtor’s mortgage exceeds the value of the property, by filing for bankruptcy, the debtor could reduce mortgage payments.
The House Judiciary Committee approved the legislation after making some limitations on the legislations scope. First, the legislation only applies to loans made after 1/1/00 and already existing as of the enactment of this legislation, so this legislation won’t help those who get loans after the date of the legislation. Second, the legislation only applies to nontraditional, subprime loans, not all mortgages. Third, the legislation will only apply to loans where the mortgage company has already served a Notice of Foreclosure. Finally, the legislation limits judicial discretion so that the judge can not lower the mortgage below market value and can not lower the interest rate below conventional mortgage rates.
The legislation is expected to be considered in the full House in January or February of 2008 and the Senate Judiciary Committee is expected to take up similar legislation in January or February of 2008. Lobby your Congressmen and Congresswomen to pass this legislation! Despite its limitations, there are thousands of people who could benefit and keep a roof over their head if Congress enacts and the President signs this legislation.
February 9th, 2008 at 4:39 am
this mortgage relief is very impotant. homeowners will get relief for the lenght of time needed until they can get back on track. Please kep us posted of the passing of ths legislation so that the econmic situation the country is facing now can improve
February 9th, 2008 at 4:40 am
this is a very important lesgislation that will help homeowners and the ecomy we all need to work on it so it can pass
March 1st, 2008 at 11:46 pm
I have owned my house for almost 9 years and have struggled only in the last 3 years paying bills. This bill is very important because pay scales haven’t risen with the rate of inflation and this has caused individuals to fall behind. Homeowners need this one time relief just to get caught up and Mortgage Companys aren’t willing to help those who have low credit score or even restart loans.
March 4th, 2008 at 7:49 am
What about homes that were put into ‘Pre-Foreclosure’ status?
March 8th, 2008 at 7:36 am
Someone had brought to my attention that, although the lending industry is trying to work things out, including the President, the counties, to which people pay property taxes, are not. I thought about this and agree. If property values are down, then how can the counties increase property taxes? I know they base the taxes off of the loan or purchased amount, but if the property is worth less than what it was paid for then, how again? It just might be that increase puts people financially over the limit. And it seems to me as though this is being overlooked. Shouldn’t there be at least a stay?
May 3rd, 2008 at 5:51 am
Yeah , thats right, and I really hope that President Bush will sign the chatper 13 mortage rate problem, thats where all the smucks are really taking not only our homes but our lives and our money.
May 11th, 2008 at 12:06 am
Unfortunately, this legislation has stalled (are we surprised?). Instead alternatives have been introduced and I know all parties are “negotiating” solutions. We’ll see if the American public will get any relief… Can you tell I’m not optimistic? :-)
May 18th, 2008 at 11:07 pm
so have they passed anything…does this apply to those that have already file bankruptcy?
May 18th, 2008 at 11:08 pm
does this apply to those that have already filed bankruptcy. does anybody know where in memphis I can go to try to get out of my bankrupcty
June 2nd, 2008 at 9:03 pm
Hello,
I am currently in the midst of a Chapter 13 bankruptcy filing with Legal Helpers. The DDP has been filed, and I should get a hearing date in the next 2 weeks, per Legal Helpers. Richard, as you are an attorney with Legal Helpers, I would also like to know how this pending legislation affects those who have already, or are in the middle of (like myself), filing bankruptcy? My mortgage arrears (2 months’ worth) are to be included in the bankruptcy, but what about the question posed by Pat G, regarding my mortgage balance being more than what my house is worth? Also, I tried approaching my mortgage company through their loss-mitigation program, but was turned down. The reason? My “overall debt” (meaning I owe more than what I make), makes me ineligible to renegotiate my mortgage terms. Is that crazy or what? I’m begging them to lower my mortgage payments, or at the very least, to renegotiate my mortgage terms (adjustable rate), and their response to me is that I am too far in debt to get a break from them!!! I just recently read an article which stated that 80% of these loss-mitigation programs are designed to set the homeowner up for failure or rejection, due to the fact that the mortgage companies are beholden to their investors first, and have no interest in helping people save their homes. Sorry to go on and on. Again Richard, any advice you could give would be greatly appreciated.
June 30th, 2008 at 11:22 am
I wish I could tell you that your experience would get better by trying again, but I honestly don’t know. At a recent seminar I attended, there was a large contingent of lawyers who represent mortgage companies and they claim their clients are working with people more and more, but they also admit that sometimes they can’t convince their clients to budge. Supposedly the mortgage companies are becoming more open to alternative resolutions, but time will tell.