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March 6, 2009

House OKs Mortgage Assistance Bill
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The House has approved a measure that would allow bankruptcy judges to
modify the terms of troubled home mortgages. Judges would have
discretion to modify interest rates, reduce the principal, and extend
the terms of a mortgage. According to the Mortgage Bankers Association,
more than 11 percent of home mortgages are now in some form of distress.
The bill now goes to the Senate, where it faces a tougher path to
approval. The measure is a key part of the Obama administration’s $75
billion foreclosure prevention plan officially launched this week. The
White House estimates the plan will assist up to one in nine homeowners.
The program offers financial incentives to mortgage-servicing companies
that let troubled homeowners modify their terms. And it calls for the
government-backed mortgage giants Fannie Mae and Freddie Mac to
refinance loans for those who don’t owe more than 105% of their home’s
value. According to Moody’s Economy.com, an estimated 13.6 million
borrowers owed more than their home’s worth at the end of last year.



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