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BANKRUPTCY HELP FOR SUBPRIME MORTGAGE BORROWERS
Tuesday, December 11, 2007
This information was reported by the American Bankruptcy Institute:
DEAL STRUCK ON MORTGAGE MODIFICATION LEGISLATION
House Judiciary Chairman John Conyers (D-Mich.) has reached an agreement with Rep. Steve Chabot (R-Ohio) on revised legislation that would allow bankruptcy judges to modify home mortgages that are on the verge of foreclosure, limiting the option to subprime and nontraditional loans, CongressDaily reported today. The measure had been stalled in the committee because of strong opposition from the banking industry. Chabot had wanted to limit the scope of H.R. 3609, sponsored by Rep. Brad Miller (D-N.C.), that would allow a borrower to ask a bankruptcy judge to reduce the interest rate and extend the length of a mortgage if the foreclosure process has been started. Under the revised bill, the option would be limited to subprime or nontraditional loans that are in foreclosure or at least 60 days in arrears. The revised bill would also give a bankruptcy judge the discretion to determine whether the debtor has insufficient income to pay the mortgage and if a loan modification should be made. Loans made from Jan. 1, 2000, to the bill's date of enactment would be covered. The National Association of Federal Credit Unions dropped its opposition to the revised bill, calling it a workable solution. A markup is scheduled for tomorrow.