[Congressional Record Volume 158, Number 26 (Thursday, February 16, 2012)]
[Extensions of Remarks]
[Page E211]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               INTRODUCTION OF THE BANKRUPTCY EQUITY ACT

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                          HON. EARL BLUMENAUER

                               of oregon

                    in the house of representatives

                      Thursday, February 16, 2012

  Mr. BLUMENAUER. Mr. Speaker, when nearly one in four homeowners owe 
more on their mortgage than their home is worth, I am pleased to 
introduce the Bankruptcy Equity Act. ``Underwater'' mortgages are a 
tremendous source of financial stress for families. While some are able 
to continue making their payments, others are so overwhelmed by debt 
that they lose their home to foreclosure, to a ``short sale,'' or by 
simply walking away. Bankruptcy should offer a legal means to escape 
from debt and get a second chance, but ordinary homeowners are denied 
this opportunity with their mortgages.
  Current bankruptcy law prohibits modifying mortgages for people who 
live in their homes but allows modification for vacation homes or 
investment properties. For instance, if a speculator whose investment 
property lost half of its value files for bankruptcy, a judge can 
modify the loan, including reducing the balance to its fair market 
value and lowering the interest rates.
  The Bankruptcy Equity Act allows a bankruptcy judge to modify a 
homeowner's mortgage, bringing fairness to ordinary people who cannot 
afford payments on the inflated value of their homes, but can make 
payments if their mortgages were fairly valued. It helps keep families 
in their homes and prevents the foreclosures that are driving down home 
prices and creating vacant properties that can devastate communities. 
It will also help prevent the buildup of another housing bubble by 
encouraging financial institutions to take greater care to ensure they 
are lending to only responsible borrowers. The securitization of 
questionable mortgages would not have been possible if homeowners were 
treated as businesses.
  I look forward to working with my colleagues to protect America's 
homeowners.

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