Mortgage Modification Bill

The Mortgage Modification Bill that was passed last week by the House of Representatives has now stalled in the Senate. One key provision of the bill is to allow bankruptcy judges to modify mortgages. Judges could reduce the principal of the mortgage as well as reduce the interest rate and extend the terms. Advocates of the bill claim these modifications, referred to as "cramdowns", would greatly reduce the number of foreclosures. Financial institutions, particularly credit unions that did not offer subprime mortgages, oppose the legislation.

Individuals who are delinquent or upside down on their mortgages need to closely monitor this legislation. There is no updated timeline on its consideration by the Senate, but for now the vote is off.

Help on the Way

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac, and major banks JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. said Friday they are halting foreclosures through March 6. This action was taken ahead of the new administration's plan to deal with the nation's housing crisis. President Barack Obama on Wednesday will outline his much-anticipated plan to spend at least $50 billion to prevent foreclosures in a speech in Arizona, one of the states hardest hit by the foreclosure crisis.