Mike’s Real Estate Show

 Lawmakers are working overtime crafting bills which might help stave off the wave of foreclosures being predicted as “Sub-Prime” mortgages start the “re-setting” process in the months to come. 2008 will be the vast majority of these resets happening though $40 Billion worth of resets are going to happen this month in December. Many of these bills are predicated upon the Borrower or Debtor going to the Bankruptcy Court as a last resort to stop the foreclosure process. Senator Durbin, Democrat-Ill, has the most aggressive of these currently working its way through the senate. Hot juicy tidbits of this bill are:

* Gives the Bankruptcy Judge, chapter 13, the ability to modify loans secured by the borrower’s primary residence.

* Would give them the option to restructure the debt to a new payment with new interest rate under a 30 year amortization schedule.

* And the biggie: Allow the judge to reduce the Loan Amount to the Market Value as of the time of the Chapter 13 discharge!

  Another similiar bill, HR (house bill)3609, is running along with the senate bill. A tad different but the esscence is the same. Both of thee bills are oppowed by the Mortgage ankers Association.

Senator Arlen Specter, Republican-Penn, has also introduced a bill competing against Durbin’s but this would require the lender to “approve” the note restructuring. This is SB 2133.

Another House Bill (HR 4178) would protect loan “Servicers” in “freezing” the re-sets from law suits by those who purchased these loans as securitized products on Wall Street. These bills all seem to be dealing with loans made January 2004 to July 31, 2007. Stay tuned to the Real Estate Hour for details!!