{ "id": "RL34301", "type": "CRS Report", "typeId": "REPORTS", "number": "RL34301", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 362131, "date": "2009-12-23", "retrieved": "2016-04-07T02:07:46.030356", "title": "The Primary Residence Exception: Legislative Proposals in the 111th Congress to Amend the Bankruptcy Code to Allow the Strip Down of Certain Home Mortgages", "summary": "The U.S. housing market began to slow in early 2006 and has led to what many economists believe is the worst housing finance environment since the Great Depression of the 1930s. As a result, there has been a significant rise in late mortgage payments, foreclosures, and bankruptcies nationwide. High unemployment has exacerbated these problems.\nMortgage market participants may voluntarily agree to adjust mortgage terms in order to help troubled borrowers continue to stay in their homes. However, there are a number of obstacles that may discourage mortgage servicers and creditors from performing loan modifications in advance of a petition for bankruptcy, even in situations in which a modification would be the most economically beneficial outcome for the majority of interested parties. There are many barriers to a successful loan modification. One notable obstacle is the way in which mortgage servicers are paid. Servicers often receive more in compensation through a foreclosure than they do through loss mitigation or loan modification. This is especially true where a servicer goes through the time and effort of offering a borrower a modification only to have the borrower redefault in the near future.\nBankruptcy provides an avenue by which debtors may get relief from their debts. Chapter 13 of the U.S. Bankruptcy Code governs reorganizations for most individuals. The Code provides courts some leeway to adjust the value of certain debts. For many secured debts, the court has \u201cstrip down\u201d\u2014also, commonly referred to as \u201ccram down\u201d\u2014authority. Strip down is the power to lower, over the creditor\u2019s objections, the secured claim to as low as the collateral\u2019s fair market value and treat the balance of the debt as an unsecured claim. However, Section 1322(b)(2) of the Code prohibits the strip down of debts secured by the debtor\u2019s primary residence.\nAt least four bills that would amend Section 1322 of the Bankruptcy Code have been introduced in the 111th Congress. These bills are S. 61 and H.R. 200 (the Helping Families Save Their Homes in Bankruptcy Act of 2009), H.R. 1106 (the Helping Families Save Their Homes Act of 2009), and H.R. 225 (the Emergency Home Ownership and Mortgage Equity Protection Act). Additionally, an amendment, S.Amdt. 1014, to S. 896 (the Helping Families Save Their Homes Act of 2009; Senate companion bill to H.R. 1106) would allow for the judicial modification of certain mortgages in bankruptcy but was voted down 45-51 and withdrawn on April 30, 2009. S. 896 was signed into law on May 20, 2009, as P.L. 111-22 without making any changes to the Bankruptcy Code. More recently, during floor consideration of H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, the House voted down an amendment that would have allowed strip down of certain mortgages in bankruptcy. H.Amdt. 534 (Amdt. 018 as printed in H.Rept. 111-370) failed by a vote of 188-241.\nThis report provides an overview of the general Chapter 13 process and analyzes how these pieces of legislation would amend certain sections of Chapter 13.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL34301", "sha1": "9aee217a0f7d16f11bf124e3444820e5f622c916", "filename": "files/20091223_RL34301_9aee217a0f7d16f11bf124e3444820e5f622c916.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL34301", "sha1": "fc5ebc9463c1e304383208399f77ba82afbc216d", "filename": "files/20091223_RL34301_fc5ebc9463c1e304383208399f77ba82afbc216d.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc818699/", "id": "RL34301_2008Nov19", "date": "2008-11-19", "retrieved": "2016-03-19T13:57:26", "title": "The Primary Residence Exception: Legislative Proposals in the 110th Congress to Amend Section 1322(b)(2) of the Bankruptcy Code", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20081119_RL34301_84962fa985e57a0275c90b76e0e8bab2b0035c27.pdf" }, { "format": "HTML", "filename": "files/20081119_RL34301_84962fa985e57a0275c90b76e0e8bab2b0035c27.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc812282/", "id": "RL34301_2008Feb29", "date": "2008-02-29", "retrieved": "2016-03-19T13:57:26", "title": "The Primary Residence Exception: Legislative Proposals in the 110th Congress to Amend Section 1322(b)(2) of the Bankruptcy Code", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080229_RL34301_8b87b4cebb4a831690dd44cf4738de25cc99fa28.pdf" }, { "format": "HTML", "filename": "files/20080229_RL34301_8b87b4cebb4a831690dd44cf4738de25cc99fa28.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc806827/", "id": "RL34301_2008Jan02", "date": "2008-01-02", "retrieved": "2016-03-19T13:57:26", "title": "The Primary Residence Exception: Legislative Proposals in the 110th Congress to Amend Section 1322(b)(2) of the Bankruptcy Code", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080102_RL34301_cff75e45e6088362595b1f287ede309d6bf8611f.pdf" }, { "format": "HTML", "filename": "files/20080102_RL34301_cff75e45e6088362595b1f287ede309d6bf8611f.html" } ], "topics": [] } ], "topics": [ "Economic Policy" ] }