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FW: House Committee Approves Bill Allowing Modification of Certain Home Mort
There needs to be added to the legislation that Debtors may recover
their attorneys fees and costs directly from the lender if the motion
is successful. For an additional measure, an amendment to the tax
code should be added that deprives the lenders a tax benefit for the
amount deemed unsecured.
>
> FYI
>
> Hank
>
> -----Original Message-----
> Sent: Monday, January 14, 2008 14:52
> To: Sections: Bus Law Insolvency Constituency List
> Subject: House Committee Approves Bill Allowing Modification of
Certain Home
> Mortgages Through Chapter 13 Bankruptcy
>
>
> Insolvency Law Committee - Business Law Section of the State
Bar of
> California
>
> Bankruptcy e-Bulletin
>
>
>
>
>
>
>
>
>
> Donna T. Parkinson
> Chair
> Parkinson Phinney
> 400 Capitol Mall, 11th Floor
> Sacramento CA 95814
> 916-449-1444
> FAX 916-449-1440
> donna@...
>
> Christopher Celentino
> Co Vice Chair
> Duane Morris LLP
> 101 W. Broadway Suite 900
> San Diego CA 92101
> 619-744-2200
> FAX 619-744-2201
> ccelentino@...
>
> Ellen Friedman
> Co Vice Chair
> Friedman Dumas & Springwater LLP
> 150 Spear Street, Suite 1600
> San Francisco, CA 94105
> 415-834-3800
> FAX 415-834-1044
> efriedman@...
> January 14, 2008
>
> Dear Insolvency Law Committee Constituency List Members:
>
>
>
> Under current law, Section 1322(b)(2) of the Bankruptcy Code
prohibits
> modification, through a Chapter 13 plan, of a claim that is secured
by real
> property that is the debtor's primary residence.
>
>
>
> On December 12, 2008, the House Judiciary Committee approved , HR
> 3609, which would allow borrowers under certain subprime and other
specified
> residential real property mortgages to substantially modify the terms of
> their loans through a Chapter 13 bankruptcy plan.
>
>
>
> HR 3609 would eliminate the prohibition in Section 1322(b)(2) only
> with respect to residential real property mortgages that : (i) are
> "subprime" mortgages (generally defined as mortgages with an annual
> percentage rate of more than 3% above the yield of U.S. Treasury
securities
> of comparable maturity, or more than 5% above the comparable U.S.
Treasury
> yield in the case of subordinate mortgages) and other
"nontraditional" loans
> (generally defined as negatively amortizing mortgages or loans with
> interest-only payments, but excluding reverse mortgages and home equity
> lines of credit), (ii) are the subject of a notice that a
foreclosure may
> be commenced, (iii) were first incurred from January 1, 2000 to the
date of
> enactment of the legislation; and (iv) debtors seek to modify as
otherwise
> permitted in Chapter 13 bankruptcy cases filed within seven years
after the
> enactment of the legislation.
>
>
>
> Such mortgages could be modified in the following ways through a
> Chapter 13 plan: (1) reducing the amount of the debt to the value
of the
> property; (2) waiving otherwise applicable early payment or prepayment
> penalties; (3) prohibiting, reducing or delaying adjustments to the
interest
> rate of an adjustable rate loan; (4) extending the maturity until
the later
> of the remaining term or 30 years after the filing of the bankruptcy
case;
> and (5) requiring the accrual of post-petition interest at a fixed rate
> equal to the Federal Reserve's conventional mortgage rate plus a
"reasonable
> risk premium."
>
>
>
> HR 3609 would also change a number of related provisions under
Chapter
> 13 of the Bankruptcy Code, including adding new Section 1322(c) to
provide
> that while a Chapter 13 case is pending, no post-bankruptcy fees,
costs, or
> charges may be added to a debt that is secured by the debtor's principal
> residence unless such amounts are contractually authorized, are
permitted
> under applicable non-bankruptcy law, are reasonable, and the secured
> creditor gives timely notice thereof to both the debtor and the
Chapter 13
> bankruptcy trustee.
>
>
>
> The bill has now been sent to the full House for consideration.
>
>
>
> The text of the legislation is available at
> http://www.abiworld.org/pdfs/HR3609_substitute.pdf
>
>
>
> Thank you for your continued support of the Committee.
>
>
>
> Best regards,
>
>
>
> Gary M. Kaplan
>
> Howard Rice Nemerovski Canady Falk & Rabkin
>
> Member of the Insolvency Law Committee
>
>
>
>
>
> The Insolvency Law Committee of the Business Law Section of the
> California State Bar provides a forum for interested bankruptcy
> practitioners to act for the benefit of all lawyers in the areas of
> legislation, education and promoting efficiency of practice. For more
> information about the Insolvency Law Committee, please see the
committee's
> Web site: www.calbar.org/buslaw/insolvency.
>
>
>
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>
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