According to an article in the Star-Telegram the bill H.R. 1106 which allows modification of toxic mortgages during bankruptcy passed through the House of Representatives last night. This is great news for Dallas-Fort Worth homeowners facing foreclosure . The bankruptcy bill was passed with a vote of 234 to 191 in favor of homeowners facing foreclosure.
The bankruptcy bill included some changes that require homeowners to prove that they actually requested a modification through their mortgage company before filing for bankruptcy and the bankruptcy judge must examine the homeowner's income to make sure the mortgage is truly unaffordable before modification can take place.
We've talked about the "requirement to request a modification through the mortgage company" before and I see this provision as an opportunity for unscrupulous mortgage lenders to string homeowners along while never giving them a yes/no answer on whether they can receive a modification. Already, many homeowners are unable to get definitive answers from their lenders regarding a mortgage modification. It might be wise for the legislators to include a provision that requires the mortgage lender to respond within a certain time limit to prevent abuse.
But before we celebrate too much, the bankruptcy bill is not final because it still has to go through the Senate and I'm sure there will be additional changes. Nevertheless, the fact that this bankruptcy bill was passed through the House of Representatives is literally revolutionary and a big win for homeowners facing foreclosure.