Update on Senate Bill S.61 (to modify 1st mortgages in chap 13)

[HHM]

Here is the updated text of S.61
As you can see, from our previous discussions, it looks like they have struck the requirement that the underlying loans be subprime, but the bill is not out of committee. However, this little phrase is troubling; that is the subject of a notice that a foreclosure may be commenced. First, what does that mean...must foreclosure have actually commenced, will a notice of default suffice, will the original loan contract which informs the borrower that foreclosure is possible be sufficient. As written, the intent seems to be that in order to modify the mortgage, the homeowner is going to have to default and wait to file BK 13 until a foreclosure proceeding officially begins. Not sure that is the most helpful thing.

[StartingOver08]

So, do you think it is possible that they may refer to the letters/correspondence you receive from the bank when you are late (beyond 30 days) but not yet in the formal "Notice of Default" stage (usually 90+ days)?

Those letters refer to foreclosure as one of the options if you don't bring your payment current.

[HHM]

So, do you think it is possible that they may refer to the letters/correspondence you receive from the bank when you are late (beyond 30 days) but not yet in the formal "Notice of Default" stage (usually 90+ days)?

Those letters refer to foreclosure as one of the options if you don't bring your payment current.

That is the question....who can say? If the language does not change, I hope it would simply be any correspondence from the lender to the debtor that references foreclosure. However, I think they should strike that provision.

[Overmylimit]

I know they were going to table this bill until the stimulous was approved, does anyone know the timeline of when this will be put back in the spotlight?

[keepmine]

Prehaps tomorrow. That's when President Obama will unveil his plan to help homeowners in distress.

[chloe0724]

I wonder if people currently in a 13 will be able to qualify for this too.

[HHM]

I wonder if people currently in a 13 will be able to qualify for this too.

Well, as it is written right now, anyone who is in an active chapter 13 can qualify. The concern would be that pesky "that is the subject of a notice that a foreclosure may be commenced" and how that will be interpreted.

[Martha13]

HHM--this may be too nuts of a question, but what if you did a ch7, surrendered the home (though the foreclosure is in process but not completed)...could you file a ch13 and include the mortgage or since it was included in the ch7 bk is it a done deal? I'm not even sure if my ? makes sense!

[HHM]

I understand what you are asking...interesting scenario.

The conservative answer would not "no", for basically the reason you cited, the debt was included in the previous BK, so in a legal sense, it no longer exists such that it would be part of your BK estate in a subsequent filing. As you said, the chapter 7 makes it a done deal.