According to the Congressional Budget Office, more than one million distressed homeowners could benefit from filing for bankruptcy under proposed legislation allowing bankruptcy judges to modify mortgages on primary residences, the Washington Post reported.
The CBO estimated that of the million, about 350,000 homeowners would take advantage of the proposed change by filing for bankruptcy during the next 10 years. But the report said, “The number of additional bankruptcy filings that would occur under the bill is, however, very uncertain.”
On Thursday the House is expected to take up this bill, H.R. 1106, a housing package that would include the provision allowing bankruptcy judges to modify such mortgages, including lowering the principal owed on loans.The change is opposed by the financial services industry, which complains that it would drive up their losses and force mortgage rate increases.
Supporters say the measure would encourage lenders themselves to more aggressively modify the mortgages of troubled homeowners rather than allow bankruptcy judges to set the new terms. Credit Suisse has estimated that the measure would lower foreclosures by 20 percent.
If you are a homeowner, particularly one that bought a home in the last few years and have an “Adjustable Rate Mortgage” or ARM, or other high interest or predatory loan, you want Congress to pass this bill. Contact your Representative via phone or email and encourage them to support H.R. 1106. Don’t know who your Representative is? You can go to http://www.savehomewithbankruptcy.com and find out by entering your zip code.