Foreclosures Could Reduce with Proposed Law Change

Legislation is currently moving around Washington that could greatly reduce the number of foreclosures. The law change would allow homeowners who are filing for bankruptcy the opportunity to restructure their mortgages. A bankruptcy judge could modify terms to let homeowners keep their homes.

Now, keep in mind that this would change the law for when you file for bankruptcy. Under current law, bankruptcy judges are powerless when it comes to mortgage modifications. However, they could restructures debts for vacation homes, yachts and private jets… unfair??? The Helping Families Save Their Homes in Bankruptcy Act of 2009 plans to change that.

Most recently, Citigroup signed on as a lender that supports the measure. This is a positive move and is setting an example for other lenders to follow suit. We will have to wait and see how this story develops, but I’m expecting quick action.