The Obama administration is already doing a lot to help heal the housing crisis. However, allowing bankruptcy judges to alter mortgage terms was just not in the cards. The Senate rejected the mortgage modification bill on Thursday.
Many financial institutions lobbied against the bill to ensure their original mortgage contracts with homeowners remained valid. The bill would have allowed judges to alter loan terms or lower interest rates for troubled homeowners. Floyd Stoner, executive director of the ABA (American Bankers Association), said that granting judges this power “would bring additional risk and uncertainty to an already volatile mortgage market and would make home loans more expensive and less available for consumers”.
It is possible that similar bills will be presented in the future. No one can predict how long this recession will last, and moreover, no one can say when we will see a turnaround in the housing market. For now, there are many programs in place to help homeowners refinance their existing mortgage into better terms and lower rates. Homeowners who are, or may be in trouble, need to consider which mortgage modification program will be right for them. Securing a lower mortgage rate now can save homeowners up to thousands of dollars every year.
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