Senate Bill 61, Helping Families Save Their Homes in Bankruptcy Act of 2009 was introduced in the U.S. Senate yesterday.  A similar bill was introduced in the House of Representatives today and President-Elect Barrack Obama has vowed to sign such a bill on January 21, the day after he is sworn in as President of the United States.

The bill would lift the ban in the bankruptcy code on modifying a home mortgage down (cram down) to the value of the home in chapter 13 bankruptcy.  The bill also would allow a bankruptcy judge to modify the mortgage interest rate and repayment time so the homeowner could afford to stay in his home.  [Read more…]

A mortgage creditor may not include attorneys fees in its chapter 13 bankruptcy proof of claim unless the loan documents expressly allow creditor attorneys fees for bankruptcy proceedings, Judge Janice Miller Karlin ruled this week.

U.S. Bank Home Mortgage relied on the “do and pay whatever is necessary to protect the value of the Property and Lender’s rights in the Property,” language, typical of promissory notes and mortgages, to add $350 in attorneys fees to its proof of claim in the debtor’s chapter 13 bankruptcy proceeding.

If [Debtors] fails to make these payments or the payments required by paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect [U.S. Bank’s] rights in the Property (such as a proceeding in bankruptcy,for condemnation or to enforce laws or regulations), then [U.S. Bank] may do and pay whatever is necessary to protect the value of the Property and Lender’s rights in the Property, including payment of taxes, hazard insurance and other items mentioned in paragraph 2. [Read more…]