Helping Families Save Their Homes Act of 2009 (H.R. 1106)

The Helping Families Save Their Homes Act will give authorization to bankruptcy courts to modify the terms of mortgages made on homeowners’ primary residences, a practice which is barred by current law. The bill, when passed by both houses, would permit bankruptcy courts to restructure the debt on home mortgages by reducing the principal owed, extending repayment periods, reducing interest rates, and prohibiting, reducing, or delaying future interest rate increases. Bankruptcy law currently permits such restructuring only for vacation homes, family farms, and yachts. Under this bill, eligibility is limited to homeowners with mortgages originated before the enactment of the legislation who have received notice that a foreclosure may be commenced. The legislation restricts the situations in which bankruptcy judges can reduce – or “cram down” – the principal owed.

Congress Eyes New Lifeline For Homeowners

Some relief for homeowners facing foreclosure is in the pipeline. A House committee approved a bill last week that would allow bankruptcy judges to order banks to reduce mortgage payments. That’s known as a “cram down.”

We’ll keep a close eye on this bill as it makes it’s way through Congress.