A new bill is being proposed by Democratic lawmakers to correct anomalies in the Bankruptcy Code to include provisions for modification of family home loans that will protect families from foreclosures and keep them in their homes.
The bill has been put forward by House Judiciary Committee Chairman John Conyers, Jr. together with Commercial and Administrative Law Subcommittee Chairwoman Linda Sanchez as a move to help homeowners in danger of foreclosures.
Both Democratic legislators have been dismayed with the poor turnaround and impact by the two government programs already put in place to combat foreclosures. The Housing and Urban Development’s Hope for Homeowners program did not attract the projected amount of lenders and homeowners to participate.
Hope Now, the collaborative program by Fannie Mae and Freddie Mac, failed in stopping the increase in foreclosures, which continued to multiply in numbers with millions still in the danger zone. According to them, mortgage modification programs being put forward would actually result in homeowners to owe more that would eventually led to further default and foreclosures.
The financial bailout package called Troubled Asset Relief Program was expected to support homeowners in preventing foreclosures, and yet was diverted to providing relief to banks and financial institutions. This caused further dismay to the legislative body which lost further trust in these entities who promised a resolution to the crisis that they created.
In response, they are putting forward this new bill that will work for a modification of the homeowner’s loan but will be under the supervision by the DOJ and a trustee. The loan should still be paid by the family, but the courts will be empowered to cut down exorbitant interest rates.
Rights to the collateral will still be under the lenders for their own protection and will be provided with extra interests as an incentive and protection in case the family falls into default once more. The future is looking grim for these families, and unless actions are done immediately, it would all be too late.
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