Bankruptcy Lawyer Blog

Bankruptcy Lawyers are going to have a new world to work with after the passage of this new Obama Foreclosure Prevention Program. Bankruptcy lawyers will now have the ability to “cram down” or modify loan balances for people going through bankruptcy. This will be a huge stick to try and force mortgage servicers to enter into loan modification agreements with loan owners. There is also a strong incentive program for lenders as they will get $1,000 per successful loan modification and then $1,000 a year to keep these people in their loans and in their homes.

More will come out about this in the next few weeks and the practical application will be interesting to watch unfold. Some judges may take this to the extreme and cut loan principal balances in 1/2 while others stick with tried and true measures like modifying interest rates and loan terms.

Tags: Bankruptcy Judges, Foreclosure Prevention Program

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