New Bankruptcy Legislation will allow you to modify your mortgage in New York
The New York Times ran an article yesterday stating that legislation allowing Bankruptcy Judges to modify mortgages has passed an important hurdle and will continue to move forward. What’s more critical to note, however, is that many limitations to the bill, including allowing only interest only or sub-prime loans to be modified, have been scrapped. The way the bill looks right now would allow Bankruptcy judges to modify the principal amount owed on the loan, so long as it is in good faith and the person applying for the modification has not been convicted of any mortgage related fraud in the past. Furthermore, the bill in its present form would require the borrower, if he/she sells the house within 5 years from the date of the modification, to share the proceeds with the bank.
Again, the Bill still has to pass the Senate and many modifications to the Bill may be made (HUGE amount of lobbying against it by the Mortgage and Banking industry-with the exception of Citibank who is behind the bill). However, the general feeling is that the bill will pass in some form and MANY of my clients in New York will be able to breathe a little bit easier knowing that their mortgages may be modified in the coming months.