As the Obama/Biden presidential team gear up to take office on January 20th their website has clearly stated that the new administration supports the rights of bankruptcy judges to modify mortgage loan terms on primary residences during bankruptcy.
The website states:
Obama and Biden are also calling for legislation to close the loophole in our bankruptcy code that allows bankruptcy judges to modify the terms of mortgages on investment properties and vacation homes but not on primary residences.
The Obama/Biden administration is also calling for aggressive action on the part of mortgage lenders to modify toxic loans of homeowners facing foreclosure. As the new administration moves forward, we need to make sure that keeping mortgage lenders accountable is a priority on their list.
We need to make sure that modified loans are reasonable, sustainable, affordable and non-toxic to homeowners who are facing foreclosure . We do not want to simply delay foreclosure by replacing one toxic loan for another.
This includes mortgage loans modified during bankruptcy. Bankruptcy judges need to make sure that modified loans are reasonable and affordable so that homeowners are less likely to face foreclosure in the future. One of the boldest moves yet is the new administration's suggestion that mortgage lenders implement a 90-day foreclosure moratorium.
Financial institutions that participate in the financial rescue plan should be required to adhere to a homeowner's code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes who are making good faith efforts to pay their mortgages.
This 90-day moratorium on foreclosures is critical for homeowners facing foreclosure. Many homeowners facing foreclosure are unable to out run the clock as the pending foreclosure looms over their head. Many foreclosures move faster than homeowners can possibly move as they battle bureaucracy and tons of paperwork trying to save their homes.