The pending legislation "Helping Families Save Their Homes In Bankruptcy Act of 2009" will apply to certain homeowners facing foreclosure and choosing bankruptcy to modify their mortgages.
Here are some of the "qualification" rules of the pending legislation:
- A homeowner facing foreclosure may qualify for mortgage modification if he/she attempted to contact the mortgage company regarding modification of the loan 15 days or more before filing bankruptcy. That means you can't file bankruptcy and expect a modification, only 14 days after contacting the mortgage company about a modification unless a foreclosure sale is scheduled to occur within 30 days after filing for bankruptcy.
- Those debtors with pending Chapter 13 bankruptcy cases once the law becomes effective will qualify under the new bankruptcy law if he/she can certify that he/she attempted to contact the mortgage company regarding loan modification before the debtor
a) files a plan seeking to modify during Chapter 13 bankruptcy or
b) attempting to change an existing plan for the purposes of modifying a mortgage under the new law.
- Depending on which version of the bill is passed, the law will only apply to mortgages created before the effective date of the new bankruptcy law.
- Those homeowners who have been notified that the foreclosure process has already begun would also qualify for modification in Chapter 13 bankruptcy.
Finally, the pending bankruptcy law would not allow modification of mortgages insured by the Federal Housing Administration, the Veterans Administration and the Department of Agriculture.