Federal legislation that affects foreclosures is now expected to pass in both the House and the Senate due to a bipartisan agreement.  The Democratic leadership bill, known as “The Foreclosure Prevention Act of 2008” contains provisions from earlier legislation, S. 2636, introduced by Senator Harry Reid (D-NV) and S. 2338, introduced by Senator Christopher Dodd (D-CT).  This legislation does not include bankruptcy legislation, S. 2136, previously introduced by Senator Dick Durbin (D-Ill). 

“We are indeed fortunate to have had the bankruptcy amendment provisions dropped from the bill,” Said Ron, Roup, Roup & Associates, UTA’s Legislative Committee Chair.  “There was an urgency to move forward with a bill on a bipartisan and expedited basis due to the current mortgage crisis situation.  However, amending the Bankruptcy Code to allow bankruptcy judges to modify the debtor’s residential mortgage would likely have increased the interest rates for all borrowers, even those not affected by the mortgage crisis.  The bankruptcy amendment provision would have been a lengthy process as demonstrated by the nearly ten years it took to pass the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and would have been an anchor on the desired legislations.”

The legislation is expected to pass Congress, with bipartisan agreement, although certain provisions may be altered.  The White House has not issued a statement yet regarding this particular legislation although President Bush has expressed concerns with some provisions of the legislation and had previously threatened a veto of Senator Reid’s bill.

Click here to read a summary of the bill as provided by Senate Democratic Policy Committee.

Click here to read the legislation.