Bankruptcy reform legislation that would give bankruptcy courts the power to modify toxic mortgages in bankruptcy is heading to the House of Representatives on Thursday. The bill will allow bankruptcy courts to help homeowners avoid foreclosure by decreasing interest rates on their mortgage, decreasing the principal of the mortgage and/or extending the life of the mortgage to up to 40 years. But the bill (HR 1106) is facing tough opposition from many mortgage industry lobbyists.
“We continue to be opposed to the broad bankruptcy bill,” said Scott Talbott, the senior vice president of government affairs at the Financial Services Roundtable, an industry group that represents 100 of the largest financial companies.
But other bankers such as Citigroup are backing the bill and anticipating that if the bankruptcy legislation is passed we will see a rapid and dramatic decline in the number of foreclosures nationwide. It’s important that all Americans get behind this bankruptcy reform bill that will help millions of homeowners facing foreclosure.
Even those who are not facing foreclosure will benefit because by saving their neighbors from foreclosure they are saving their own homes from losing value because of the high rate of foreclosure in their neighborhood and community. If you want to help decrease the number of foreclosures in this country, contact your congressman today and tell him/her that you support this legislation.