Mortgage Cramdown Fails in Senate
The hotly-contested mortgage cramdown legislation, passed in the House last month as HR 1106, the "Helping Families Save Their Homes in Bankruptcy Act of 2009," has failed in the Senate.
Among other significant changes, the failed legislation would have permitted a Chapter 13 bankruptcy plan to: (1) modify the rights of claim holders with respect to a claim for a loan originated before the effective date of the Act and secured by a security interest in the debtor's principal residence that is the subject of a foreclosure notice; and (2) deny debtor liability for certain fees and charges incurred while the bankruptcy case is pending and arising from a debt secured by the debtor's principal residence, unless the claim holder observes specified requirements. The legislative summary detailed the bill's other proposed changes, including amendments to the HOPE for Homeowners plan.
Mortgage Cram-Down Bill Passes House
The U.S. House has passed a compromise version of mortgage cram-down legislation, HR 1106, officially known as entitled the "Helping Families Save Their Homes in Bankruptcy Act of 2009."
Among other significant changes, the legislation permits a Chapter 13 bankruptcy plan to: (1) modify the rights of claim holders with respect to a claim for a loan originated before the effective date of the Act and secured by a security interest in the debtor's principal residence that is the subject of a foreclosure notice; and (2) deny debtor liability for certain fees and charges incurred while the bankruptcy case is pending and arising from a debt secured by the debtor's principal residence, unless the claim holder observes specified requirements.
The legislative summary details the bill's other changes, including amendments to the HOPE for Homeowners plan.
One to Watch: Mortgage Cram-Downs Clear Committee
The House Judiciary Committee has approved H.R. 200, entitled the "Helping Families Save Their Homes in Bankruptcy Act of 2009." Judiciary Committee Chairman John Conyers issued a statement after the measure was approved.
The measure would amend bankruptcy laws for Chapter 13 debtors, excluding some mortgages from debt calculations, and allowing judge-imposed modifications to mortgages. Specifically, the measure would grant a judge the ability to modify the terms of a mortgage for a homeowner in chapter 13 bankruptcy, by: (1) reducing a claim to equal the value of the debtor's interest in the residence securing such claim, and any adjustments to a related adjustable rate of interest; (2) waiving early repayment or prepayment penalties; and (3) extending the repayment period.
