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Bankruptcy Judge = Mortgage Negotiator?
April 3, 2009 - Sylvia Heldreth
Congress debates changes in bankruptcy laws every year. This year, President Obama's housing rescue plan includes a provision that would allow judges to reduce mortgage debt for homeowners. This bill only applies to existing mortgages on primary residences whose owners tried to negotiate with their lender prior to filing for Chapter 13 bankruptcy.
The objective is to encourage lenders to work with the homeowner to avoid bankruptcy. Proponents say it would be a great way to assist homeowners that owe more than their house is now worth.
Financial institutions oppose the bill because they believe it would increase lenders' risk, raise mortgage rates and overload courts. Some say it rewards irresponsible behavior.
It hasn't passed yet and may not. What do you think?
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