Congress may soon vote on H.R. 3609, which is titled the Emergency Ownership and Mortgage Equity Protection Act. The idea is to provide bankruptcy judges the authority to modify mortgage loans to help families afford the payments.
The bill proposes allowing distressed homeowners to include their mortgage in a Chapter 13 bankruptcy filing. There are some other important proposed changes also.
H.R. 3609 would eliminate the credit counseling requirement that was put in place by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. A distressed homeowner would merely have to prove to the court that a foreclosure action has commenced. It is unknown if this provision will remain in the final version of the bill.
These are the major points of the bill:
- Eliminates taxpayer bailout of subprime mortgage industry
- Helps some families avoid foreclosure
- Helps surrounding property values by reducing overall foreclosure rates
- Lenders could avoid expensive foreclosure costs
- Eliminates requirement for credit counseling to file Chapter 13 bankruptcy (assume foreclosure action has commenced)
Another bill is also being proposed. H.R. 3915, also known as the Mortgage Reform and Anti-Predatory Lending Act of 2007, would implement minimum standards designed to prevent widespread reckless lending practices. The goal is to avoid future misbehavior by the subprime mortgage lenders and to protect unsuspecting consumers.
Both bills are expected to be voted on in the next couple of weeks. You can still voice proposed changes to these bills by contacting Rep. Brad Miller (D-NC) or Linda Sanchez (D-CA).
As far as this author is concerned, removing the credit counseling requirement is not a beneficial component to H.R. 3609. However, H.R. 3915 does appear to be a good piece of legislation that could reduce future predatory practices in the subprime mortgage sector.
Update: H.R. 3915 is scheduled for a House vote on Wednesday, November 14. If you would like to show your support for H.R. 3915 or request changes, you may follow this link for the Center for Responsible Lending:
http://ga3.org/campaign/SupportHR3915/we67be3rz77j3k3m?