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This new legislation would empower federal bankruptcy judges to modify residential mortgages including reducing the principal, the interest and the monthly payment.
Bankruptcy is an extreme solution that persons should never take lightly, but with this new legislation it might provide a way for people in financial trouble to keep their homes.
It could also help the real estate market recover. While real estate appraisers valuing neighboring homes might consider that a bankruptcy judge had reduced the loan principal, which is better for a neighborhood -- an occupied home home or a boarded-up bank owned house.
Will this only apply to people who are already in default. Can people who want to reduce their mortgage purposely default and sign up for Chapter 13?
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