Association of Community Organizations for Reform Now

Take Action: Urge Your Representative to Make Bankruptcy Laws Fair to Protect Homeownership

An inequity in the bankruptcy law currently denies low- to moderate-income borrowers protections for their homes that the law has long granted to wealthier borrowers with respect to their vacation homes or investment properties. Bankruptcy judges have the power to make loan modifications on secondary properties, but they cannot do so for families who are facing the loss of their primary residence.

Closing this loophole in the bankruptcy law is one of the most important legislative changes that could keep hundreds of thousands of families from losing their homes. The Durbin Amendment to the “Foreclosure Prevention Act,” which passed in the Senate April 10, would have given this power to bankruptcy judges, but unfortunately the provision was not included in the final legislation. A similar House measure, H.R. 3609, the “Emergency Home Ownership and Mortgage Equity Protection Act,” was passed by the House Judiciary Committee last December.

This week the House Financial Services Committee is expected to approve H.R. 5830, the “FHA Housing and Homeowner Retention Act,” which would expand the FHA program to help refinance at-risk borrowers into affordable mortgages.  Other provisions will be added to this housing package before it reaches the House floor.  The bankruptcy legislation should be one of these key provisions included in this housing package since it is the only solution being considered that will provide immediate, targeted relief to distressed homeowners facing foreclosure.

Take Action:  Email your Congress member to support provisions to make the bankruptcy laws fair in any housing legislation being considered on the House floor.

October 20, 2019


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