Allow Bankruptcy Judges to Modify the Terms of Home Mortgages for Ordinary Families

Promise in the Works President Obama is working on the following promise:

Will repeal provisions of the Chapter 13 law that prohibit bankruptcy judges from modifying the original terms of home mortgages for ordinary families—regardless of whether the loan was predatory or unfair or is otherwise unaffordable - "so that ordinary families can also get relief that bankruptcy laws were intended to provide." — "Obama: Supporting Urban Prosperity"


Other promises regarding housing.


Updated: February 20, 2009

Obama seeks bankruptcy changes for home mortgages

On Feb. 18, 2009, President Obama unveiled a plan to address the foreclosure crisis centered on a $75 billion fund to help people refinance subprime or underwater mortgages.

As part if his announcement, Obama said he would continue to seek changes to bankruptcy laws.

"My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair market value — as long as borrowers pay their debts under court-ordered plans," Obama said at a speech in Mesa, Ariz. "I just want everybody to understand, that's the rule for investors who own two, three, and four homes. So it should be the rule for folks who just own one home, as an alternative to foreclosure."

Such legislation has been introduced in Congress. Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee, said the House would soon take up the legislation.


White House Web site, Remarks by the President on the home mortgage crisis, Feb. 18, 2009

The Boston Globe, President steers $275b to housing, Feb. 19, 2009

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