April 30, 2009- The second step in assisting homeowners who are in jeopardy of losing their homes in foreclosure was defeated today in the U.S. Senate. The proposed law would have given bankruptcy judges the power to force lenders to modify mortgages on the debtor’s home. The so-called “cram down” powers would be useful in adding leverage on the big banks to work with homeowners to avoid a judge ordering a modification. As it is now, the borrower can attempt to re-affirm their debt with the lender to keep their home during the bankruptcy process. They will still be able to attempt this; however, the banks will likely not be as willing to make any kind of changes or modifications to the actual terms. They will likely ask the borrower simply to reaffirm the debt on the same terms they originally had, but adding the unpaid or late payments to the principal.
If you have any questions about bankruptcy, loan modifications, or foreclosure relief, you can call for a free consultation.