Here it comes. At long last. Tomorrow (Thursday, March 5, 2009) is the first major vote on the Obama-backed change in the law to permit forced modification of homeowner mortgages in Chapter 13 bankruptcy. We bankruptcy lawyers in Northern Virginia, suburban Maryland and DC, have been operating for the past three years of the real estate crisis with our hands tied. We could discharge most unsecured debt (credit cards, etc.). We could eliminate second mortgages when the home value had dropped so that the second mortgage was unsecured. We could even modify mortgages on vacation homes, but we could not touch the mortgage on the collateral the debtor most dearly wanted to keep — the primary residence. Sad and highly frustrating when you are trying to do your very best for the client.
Let’s keep our fingers crossed. Better yet, don’t be shy to lobby. Call your US representative and senator. Tell them it’s important. They must pass this bill, especially in a form that maximizes a homeowner’s power to make that mortgage affordable. They put you into a phony exploding interest rate (better known as a “subprime mortgage.”) Let’s make it real this time.