With a combination of factors, including increased job losses , persistent unemployment and a ticking time bomb of subprime mortgages that have yet to reset, the foreclosure crisis will probably get worse before it gets better if legislators don’t take action now.

It was during 2005 and 2006 that mortgage lenders began to increasingly give borrowers interest-only adjustable rate mortgages that are set to reset at higher rates in 2010 and 2011. If Congress and mortgage lenders take no action to modify these toxic loans we could see an explosion of foreclosures over the next few years as homeowners struggle to repay the ballooning mortgages.

Proposed legislation that would allow bankruptcy judges to modify toxic mortgages during bankruptcy would help to prevent a large portion of these future foreclosures. The legislation would also provide a very real incentive to mortgage lenders to take action to properly modify the mortgages before the mortgages reach the bankruptcy courts.

Legislation allowing bankruptcy judges to modify these toxic mortgages would finally discourage future “creative” mortgage schemes that endanger the financial health of American homeowners.