House Passes Bankruptcy Mortgage Modification

The House of Representatives passed legislation this evening that would give bankruptcy judges the power to rewrite mortgages in chapter 13 bankruptcy.  The bill didn't pass as proposed as amendments were made to the legislation.  The amendments ensure that homeowners must first attempt to negotiate a voluntary loan change with lenders.  The legislation as passed would require the homeowner facing foreclosure to seek a loan change 30 days before filing for bankruptcy.  Bankruptcy judges are charged with the responsibility that homeowners complied with this provision.  Amendments also require homeowners provide the required financial information to their lenders when seeking voluntary loan modification. Bankruptcy judges would also be required to weigh a homeowner's income against the payments before deciding whether an interest rate or principal reduction was proper.  Judges are required to use federally approved appraisal guidelines in making a determination as to the house's value. The House of Representatives passed legislation this evening that would give bankruptcy judges the power to rewrite mortgages in chapter 13 bankruptcy.  The bill didn't pass as proposed as amendments were made to the legislation.  The amendments ensure that homeowners must first attempt to negotiate a voluntary loan change with lenders.  The legislation as passed would require the homeowner facing foreclosure to seek a loan change 30 days before filing for bankruptcy.  Bankruptcy judges are charged with the responsibility that homeowners complied with this provision.  Amendments also require homeowners provide the required financial information to their lenders when seeking voluntary loan modification. Bankruptcy judges would also be required to weigh a homeowner's income against the payments before deciding whether an interest rate or principal reduction was proper.  Judges are required to use federally approved appraisal guidelines in making a determination as to the house's value.