Mortgage Industry Fights Mortgage Modification In Bankruptcy With Myths

February 18th, 2009 by Reed Allmand

The mortgage industry is fighting with its very last breathe trying to defeat the “Helping Families Save Their Homes in Bankruptcy Act of 2009” by spreading myths and untruths about how the new bankruptcy law would affect the economy, future mortgages and the mortgage industry itself. If the bankruptcy law passes it would give bankruptcy courts the power to modify toxic mortgages of homeowners facing foreclosure. My nevertheless, the mortgage industry insists on pushing myths to prevent help from reaching homeowners.

Myth #1: The mortgage industry clams that if the “Helping Families Save Their Homes in Bankruptcy Act of 2009” is passed it will increase future mortgage rates by 2 percent. But this is simply FALSE, there is no proof anywhere that future mortgage rates would increase because of changes to the bankruptcy law. A matter of fact, there is evidence that the rates would remain unchanged by the bankruptcy law because the law only allows modification of current mortgages not future mortgages.

Myth #2: The mortgage industry claims that the bankruptcy law would make them vulnerable to lawsuits by the owners of the mortgages because the modifications would make them lose money. The truth of the matter is that mortgage companies may be currently vulnerable to lawsuits when they modify mortgages without the backing of a court. But under the “Helping Families Save Their Homes in Bankruptcy Act of 2009” those modifications would be covered and protected from lawsuits by the full power of the bankruptcy law.

The mortgage industry must cease its efforts to defeat the “Helping Families Save Their Homes in Bankruptcy Act of 2009” and move together with the country to stem the tide of foreclosures. With the amount of foreclosures predicted to increase in the future, taking no action to modify mortgages in bankruptcy will financially endanger us all.