04 Feb Congress Could Save Your Home From Foreclosure
Congress considered Chapter 13 bankruptcy bill called the “Emergency Home Ownership and Mortgage Equity Protection Act of 2007” but failed to enact it. This bill would have changed bankruptcyand allowedthe judge to modify the terms of a home loan in a Chapter 13 proceeding. The legislation would have made a small change in Â§1322(b)(2) of the bankruptcy code to delete a provision thatprevents the court from modifying “the rights of holders of secured claims” when their claim is “secured only by a security interest in real property that is the debtor’s principal residence”.
According to a study conducted by the Center for Responsible Lending, changing the language that prevents the bankruptcy court from modifying the debtor’s home loan could stop 600,000 homes from being lost to foreclosure over the next several years. In addition to saving those homes for the families living in them, preventing foreclosure would help maintain property values for the families who have manageable debt on their homes and live in neighborhoods with a high foreclosure rate. This is as true today as it was in 2007.
The National Association of Consumer Bankruptcy Attorneys (NACBA) is cooperating with the Center for Responsible Lending and several other consumer rights organizations in supporting this much needed legislation. NACBA sponsors annual lobbying events in Washington DC for its members. I have had the good fortune to be able to participate in these events for several years.
After a preparatory meeting with NACBA staff and directors the previous day, we met with congressional staffers and explained the pending bills and the reason why these bill would benefit the people of our state and the country as a whole. I have met and talked with congressional staff for both of Oregon’s Senators, Jeff Merkley and Ron Wyden, as well as legislative staff for Representative Peter DeFazio from Oregon’s 4th congressional district. Therewas significant interest in this important legislation that could help keep many Oregon families in their homes. By extrapolation from the estimates made by the Center for Responsible Lending, there are 3,866 Oregon families that could be helped if the proposed legislation is enacted.
Who would not want to support a legislative change that costs the government no money, costs the lender nothing, and keeps a family in their home? It is hard to see any negative side to this legislation. Despite arguments to the contrary by the Mortgage Bankers Association, there will be no negative impact on home credit.
An article in the Los Angeles Times by former HUD Secretary and conservative congressman Jack Kemp was unequivocal in its support for the proposed bankruptcy legislation. Secretary Kemp pointed out the unnecessary difference between the benefits allowed to real estate developers or speculators and homeowners. There is no doubt it is time to level the playing field and keep American families in their homes when it is possible to do so.
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