By Marcie Geffner - Bankrate.com
Federal bankruptcy courts currently offer only scant relief to homeowners who can't afford to pay their mortgages. That could change, if supporters of legislation that would allow bankruptcy judges to modify mortgages can muster enough votes in Congress to override a threatened presidential veto.
Giving bankruptcy courts the authority to modify home loans would be a palatable way to accommodate both borrowers and lenders, says Jack Williams, a bankruptcy professor at Georgia State University College of Law. Borrowers would "get to keep a major asset with significant upside potential" and avoid the emotional wound of losing their homes, while lenders would be placed in "a position based on the fair market value of the property," which would be better than a foreclosure, Williams says.
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