Our legislators have once again refused to give bankruptcy judges the power to modify toxic mortgages during bankruptcy. Legislation that would have allowed bankruptcy judges to modify toxic mortgages by resetting the mortgage terms, extending prepayment periods, redefining interest rates/fees or decreasing the principal balance of a toxic mortgage failed to pass into law last week. It is absolutely amazing that these are the same legislators who backed banker bailouts and have allowed those same banks to avoid their responsibly to homeowners facing foreclosure .
How can we possibly take our legislators seriously when only a fraction of the homeowners facing foreclosure are even able to benefit from mortgage modification programs?
Many of these homeowners wait months to hear back from banks about their modification status only to learn that they will be foreclosed on soon. How can we take them seriously when they continue to block off additional bankruptcy options for homeowners facing foreclosure? Investors with 2nd homes and other real estate have the power to possibly modify the terms of their mortgage during bankruptcy; but not homeowners trying to protect the very roof over their head-the only home they have. Why is that?
While homeowners facing foreclosure are often able to save their homes using bankruptcy under the current code, it can be difficult for some homeowners who are in mortgages that can’t be described as anything else other than toxic. We need to face the facts about this foreclosure crisis. Millions of Americans were sold toxic mortgages and those mortgages are not good for them in the long run. Those toxic mortgages must be modified.