Bankruptcy Legislation Aims To Prevent Foreclosures
By Dina ElBoghdady Washington Post Staff Writer Tuesday, November 20, 2007; Page D01
Congress is considering legislation that would allow bankruptcy court judges to rewrite loan terms for people at risk of losing their homes, a change that supporters say could save half a million borrowers from foreclosure through early 2009.
Under this plan, judges could lower the interest rate of a mortgage on a primary home, extend the life of the loan or forgive part of the debt -- as they currently can for vacation homes, farms and investment properties. Doing so could reduce by a quarter the 2 million foreclosures expected in the next 18 months, according to Moody's Economy.com.
Of all the legislative proposals aimed at helping at-risk borrowers, this one is thought by consumer advocates to offer the most wide-reaching and immediate relief. The House has held two hearings on a bill introduced by Democratic members, Brad Miller of North Carolina and Linda T. Sanchez of California. Similar legislation has been offered in the Senate. -more-
