The Real Deal Miami

Bankruptcy proposal facing criticism

March 02, 2009 03:05PM

Lawmakers are criticizing the Obama administration’s proposal to amend
bankruptcy laws to allow judges to modify mortgages. Many Republicans
are opposing the legislation, which would allow judges to reduce the
principal due on a mortgage to the property’s current market value.
The step could put pressure on mortgage servicers to modify loans
before the mortgages come before judges. The Congressional Budget
Office estimates that more than 1 million households would benefit
if bankruptcy judges could modify loans.