Senate Foreclosure Relief Bill Comes To A Vote

THE SENATE FORECLOSURE RELIEF BILL will come to a vote in the Senate, but without giving bankruptcy judges the power to adjust downward the principal balance of mortgages.

I have not reviewed the wording of the bill the House has passed, but it sounds like bankruptcy judges will be able to dramatically reduce delinquent interest, but have limited authority to adjust downward the principal balances due on loans.

I agree with the Senate’s approach.  If bankruptcy judges were given authority to reduce the principal amount owed, especially on line of credit seconds, thousands of homeowners would file bankruptcy who could afford to make debt payments, with accompanying massive loss by lenders the financial system might not be able to sustain.

The Senate bill also contains legislation allowing states to issue $10 billion in tax free mortgage bonds to replace delinquent/defaulted loans.