There are several different projects underway aimed at forestalling foreclosures. One of the latest, Project Lifeline, has, like its predecessors, been deemed inadequate by many. In order to try and prevent more foreclosures, Congress is considering a bill that would allow bankruptcy judges the power to modify loan terms.
Inman News reports on what some see as benefits for homeowners facing foreclosure:
Giving bankruptcy judges cram down powers might provide an added incentive for lenders to conduct their own loan modifications, instead of having them imposed by a court, Congressional Budget Office researchers said in a recent report.
However, not everyone is sold on the idea of this bankruptcy "cram bill." Perhaps such a law would result in higher interest rates across the board for those getting new mortgages. Mortgage lenders -- and their investors -- would want a higher rate of return to balance fewer gains from mortgage with different loan terms.
Do you think that bankruptcy judges should be allowed to adjust mortgage loan terms?
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Tracked on: February 29, 2008 2:35 PM | Permalink to Trackback