New Legislation Seeks Mortgage Modifications In Bankruptcy Court
There is currently legislation in both houses of Congress (S.3690 and H.R. 7328) that would amend the Bankruptcy Code to allow Bankruptcy Judges to modify first mortgages on homestead real estate. Under current law, Bankruptcy Judges are not allowed to modify first mortgages on homestead real estate; however, they are allowed to modify first mortgages on vacation homes or investment properties. Hmmmm.
The legislation was introduced in the Senate by Senator Dick Durbin and in the House by Representative Brad Miller. The intention is to have a piece of legislation ready to go after the inauguration of President Barack Obama. The new Congress will convene on January 6, 2009, and will likely be ready to present a bill to the new President sometime shortly after that.
Another alternative is to attach the bankruptcy reform bill to the economic stimulus package currently being spoken about. This would be an even faster track for the legislation.
As the country sinks deeper into a recession, one of the best ways to stabilize the housing market would be for the federal government to provide a way for people to stay in their current homes and pay a fair price for them. Right now, in Southwest Florida, we have too many people who are liquidating their 401K plans and IRAs just to have a roof over their heads. Likewise, the homes people are trying to save are underwater to the tune of $100,000. Mortgage modifications, while effective in some respects, will not be able to compete with this modification process.
So, this is a great time for the Obama Administration and the 111th Congress to take massive action that will finally put this Country back onto the road to recovery.
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, and Naples and has expansion plans for Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog.
