Monday, March 9, 2009

Changes Coming to Bankruptcy Law?

Homeowner Rescue Bill Passes House -
The bill, a package of housing-related initiatives, passed 234 to 191, largely along party lines. It now heads to the Senate, where it will face a tougher fight but has the backing of some powerful members.

Under the legislation, bankruptcy judges could cut the principal on a homeowner's mortgage as well as reduce the interest rate and extend the terms -- provisions known as cramdowns.

It needs to pass the Senate, possibly a conference committee and then off to the President for signing before it becomes law. I expect it to pass.

If memory serves this was the law until a Supreme Court decision early in the Nineties (or late Eighties).

The bankers sound outraged - almost as outraged as those paying for their bailout.