Cramdown Legislation One Step Closer to Passage in Congress

Cramdown legislation to allow bankruptcy judges to modify mortgage interest rates came one step closer to passage on Tuesday when house Democrats amended the legislation to restrict cramdowns only to subprime mortgages as opposed to all mortgages.  This is a significant step toward passage of the law that some Democrats were concerned would have the effect of relieving some of mortgagors of debt they were able to afford to repay and who were not victims of fraudulent underwriting and loan approval processes.  It is now expected that the legislation will garner the votes needed to pass the House and will then go to the Senate where it will face a very close vote.  One major change to the proposed legislation is that homeowners must now demonstrate to a bankruptcy judge considering a judicially forced cramdown that they attempted and failed at obtain a loan modification with the lender.
 
The lawyers at Belsky, Weinberg & Horowitz strongly urge all individuals contemplating Chapter 13 bankruptcy to use their best efforts to obtain a loan modification to reduce the interest rate on their loans.  Do not wait until the last minute to do this as the mortgage company can take more than thirty (30) days to make its decision.  Also, do not wait until the eave of a foreclosure sale date for an answer from the mortgage company.  If you are less than five (5) days from the sale date and do not want to lose the home, you will need to file the bankruptcy immediate and worry about the cramdown opportunities later.  Call us anytime for assistance.  (800) 895-5333.  We are Maryland attorneys with significant experience with all matters related to bankruptcy.