The Wall Street Reform and Consumer Protection Act (H.B. 4173) is under consideration by Congress. One of the most important aspects of this proposed legislation is the changes to bankruptcy law that will allow bankruptcy judges to modify toxic mortgages. A similar proposal was defeated in the Senate earlier this year; but we're hoping that this time legislators will give American homeowners a fighting chance to battle mortgage lenders who are not responsive under the voluntary modification programs.
UPDATE: Take Action Now!!
Contact Your Representative to Support this Legislation!
To contact your representative:
This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure!!!
1. Phone toll free at: 877.354.4958
2. Put in your zip code
3. When you reach the receptionist:
- State your name
- Say that you are a constituent
- Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.
If the reform is passed, bankruptcy judges would have the power to modify a homeowner's mortgage by lowering the interest rate or reducing the amount of principal owed on the loan. Opponents of the changes say that allowing bankruptcy judges to modify mortgages would create a ripple effect of rising costs for borrowers who are not facing foreclosure. But we don't agree.
Right now mortgage lenders are swamped with a record number of delinquencies and foreclosures that have threatened the solvency of banks once consider rock solid institutions. It is the greed and refusal to change that has created a stalemate in the foreclosure crisis, leaving many homeowners in a state of limbo as they wait for the proverbial "axe" to drop.
Even when homeowners are willing and able to negotiate with lenders so they can avoid foreclosure , many lenders are unable or unwilling to comply, especially if the home facing foreclosure has considerable equity. Also, many homeowners are weighed down by mortgages that are designed with explosive interest rates (aka ARMs) and properties that have lost significant value in the current marketplace.
Many of them succumb to foreclosure, leaving communities, many of them already vulnerable, littered with empty houses and decimated tax bases. If legislators allow bankruptcy judges to modify toxic mortgages in bankruptcy, we not only increase our chances of saving individual homeowners from foreclosure; but we also save communities from the negative fallout of foreclosures which leave behind fractured and weakened communities.