The “Helping Families Save Their Homes in Bankruptcy Act of 2009″

The Bankruptcy Lawyers and Foreclosure attorneys at Yesner & Boss, P.L. posted a Real Estate law blog entitled “Foreclosure Prevention Programs Fail.” The article highlighted the National Association of Consumer Bankruptcy Attorney’s (NACBA) view that a court ordered process of loan modifying is necessary in order to solve the current mortgage crisis as opposed to the current voluntary loan modification process which is available. Several proposals have been made in this effort but the latest, a United States Senate Bill, seems to be gaining the most momentum and has been also endorsed by both the United States President-Elect Barack Obama and Vice-President Elect Joe Biden.

Currently, the Bankruptcy Code prohibits the modification of mortgage loans on primary residence. The proposed Senate Bill (S.61) seeks to amend certain provisions of the Bankruptcy Code in order to allow a Homeowner to be able to modify their mortgage loan in a bankruptcy proceeding through a judicial rather than voluntary process. The bill was introduced on January 6th, 2009 by Illinois Senator Dick Durbin. Senator Durbin’s view appears to be that the provisions of the Bankruptcy Code of which this bill seeks to amend are outdated, especially in today’s mortgage crisis. The goal of this Bill is to give Bankruptcy Judges the power to modify mortgage loans secured by principal residences during a bankruptcy proceeding possibly to reduce the balance to the current fair market value (cramdown), extend the payment period, modify the interest rate, convert an adjustable rate mortgage into a fixed rate mortgage, or any other modification the court may choose.

Proponents of this bill believe that it is the first viable step in a foreclosure prevention plan of some sort and that if passed this bill will help millions of homeowners stay in their homes and also help towards stimulating growth in the economy. We will be sure to keep our clients informed on the progress of this bill and other options or programs that are available to our clients so please check back routinely for any updates and contact us with any questions or for any further information regarding your particular situation to find out how we may be of assistance. Contact the Bankruptcy Attorneys at Yesner & Boss, P.L. for further information.