WASHINGTON, D.C. – May 8, 2014 – (RealEstateRama) — Congressmen Steve Cohen (TN-09) and Jim McDermott (WA-07) today introduced the Limiting Investor and Homeowner Loss in Foreclosure Act of 2014 to prevent foreclosures and help struggling families keep their homes. The newly-introduced legislation would encourage debtors and secured lenders to come together to discuss and secure mutually beneficial resolutions of their mortgage difficulties.
“Foreclosures in Memphis have unfairly hurt the middle class, put unneeded stress on already-struggling families, and torn apart local communities and neighborhoods,” said Congressman Cohen. “This bill would help families keep their homes and cut down on foreclosures by giving banks and homeowners a chance to sit down and hammer out a resolution that allows both sides to benefit.”
“Hasty, oftentimes unnecessary foreclosures in the housing market continue to be a fierce and urgent issue in America,” said Congressman McDermott. “These foreclosures imperil millions of families and drag down the economy. The administration is absolutely right to proclaim that more needs to be done. This legislation will give homeowners the ability to work with their lenders on options to stay out of foreclosure.”
Current bankruptcy courts with a mediation and loss mitigation program in place have been quite successful, which is proof positive bankruptcy courts can play an important role in helping facilitate successful voluntary loan modifications. But several banks have challenged the legal authority of the bankruptcy courts to carry out such programs. The Cohen-McDermott legislation would clarify that bankruptcy courts already have the authority to operate voluntary mortgage modification programs.