Written by Craig D. Robins, Esq.
Today, the House of Representatives will consider proposed Congressional bill HR 1106, a housing package that includes the bankruptcy cram-down mortgage modification provision that was previously contained in proposed Congressional bill HR 200 (see my blog post, Will 2009 Bring Major Bankruptcy Law Changes? ).
The proposed legislation would let homeowners bring applications in Chapter 13 bankruptcy proceedings to reduce the principal and interest rate on a mortgage. This would enable debt-strapped homeowners to reduce their monthly payments rather than lose their homes.
If this bill is successful, then it will move over to the Senate.
As a Long Island Chapter 13 bankruptcy attorney, I see many hardworking families on Long Island finding it difficult to keep their homes because of rapidly declining real estate values. Many of these families were sold toxic mortgage products that they can no longer afford. Many families cannot afford to keep their homes in Chapter 13 bankruptcy proceedings based on the current bankruptcy laws, which do not permit cram-down of first mortgages.
The mortgage and banking industries are against this legislation are have been trying to lobby Congress against passing the bill. However, we Long Island bankruptcy attorneys think the proposed law is a sound solution to a difficult problem.
Last week, President Obama called for such legislation as part of his housing rescue plan. (See my blog post, President Obama Announces Foreclosure Remedy ). Although Republicans are against it, Democrats and consumer advocates regard this legislation as crucial to slowing the rapid rate of foreclosures.
If the proposed law is enacted is will have a major impact in stemming foreclosure on Long Island.