“At the heart of the current economic crisis is the explosion of subprime and predatory lending that has fueled millions of foreclosures and significantly depressed property values across the country,” said Delahunt. “Voluntary loan modification programs are simply not working and this proposal provides immediate and effective relief without costing taxpayers a dime.”
This legislation, “The Helping Families Save Their Homes in Bankruptcy Act,” was part of legislation introduced by Delahunt and Congressman Paul Hodes (D-NH) at the end of the last Congress. The bill was reintroduced by Delahunt and House Judiciary Committee Chairman John Conyers at the beginning of the 111th Congress.
The proposal is a straightforward change to the law to give bankruptcy courts the power to restructure mortgages on primary residences as is done with other assets, including vacation homes, family farms, and boats. Voluntary loan modification programs have not worked because a high percentage of subprime mortgages have been packaged and securitized, and then sold to investors that are often difficult to contact or even identify. Specifically, the bill gives bankruptcy judges the power to modify terms of subprime and other questionable mortgages and helps homeowners save their homes from foreclosure
The legislation will now move to a vote from the full House of Representatives.
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