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  • Housing Market Tracker - Homebuilders Criticized for Benefitting From Foreclosure Bill
    Here is one of the interesting paragraphs from the foreclosure prevention act -

    "THIS NOTICE SUMMARIZES PROVISIONS OF S. 2636, THE FORECLOSURE PREVENTION ACT OF 2008.

    TITLE IV - HELPING FAMILIES SAVE THEIR HOMES IN BANKRUPTCY

    SUBTITLE A – MINIMIZING FORECLOSURES

    Special Rules for Modification of Loans Secured by Residences

    In a nutshell, the substitute (or Foreclosure Prevention Act) changes the bankruptcy code to allow judges to modify the principal terms of a debtor’s mortgage (current law prohibits this) so that judges can reduce the principal balance of a loan and the rate of interest of the mortgage.

    The substitute (or Foreclosure Prevention Act) authorizes a bankruptcy plan for individuals with regular income to:

    (1) Modify an allowed secured claim secured by the debtor’s principal residence if the debtor’s income is insufficient to retain possession of the residence by curing a default (returning the debtor to pre-default conditions) and maintaining payments while the case is pending;

    (2) Provide for payment of such claim for a period not to exceed 30 years;

    (3) Permit the addition of certain costs to secured debt under specified circumstances; and

    (4) Waive any prepayment penalty on a claim secured by a debtor’s principal residence.

    Industry experts estimate that the cost of allowing judges to modify a debtor’s mortgage could substantially increase uncertainty for lenders thereby increasing the risk associated with making a mortgage loan. The costs associated with this increased risk would be passed on to consumers in the form of higher interest rates.

    The additional cost to consumers has been estimated to result in an interest rate increase of 1.5 to 2 percent. Every quarter point increase in mortgage interest rates would prevent 1.1 million Americans from being able to afford a home. Accordingly, this change in the bankruptcy code could potentially prevent 9 million Americans from owning a home.

    This policy will cost the average American homebuyer an extra $60,000 in interest costs over the course of a 30-year mortgage (assuming the U.S. average home price of $166,000).

    In 2008 and 2009 alone, this provision will drive up mortgage interest rates for an estimated 11 million home buyers."

    rpc.senate.gov/_files/...
    Apr 07 08:52 am |Rating: 0 0 |Link to Comment |View article
  • Housing Market Tracker - Homebuilders Criticized for Benefitting From Foreclosure Bill
    Here is the link to the "Foreclosure Prevention Act"

    rpc.senate.gov/_files/...
    Apr 07 07:32 am |Rating: 0 0 |Link to Comment |View article

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