Action is being seen in both the House and Senate to amend the Bankruptcy Code during the lame duck session of Congress to allow debtors to modify mortgages on residential real property. On November 17, 2008 Senator Durbin introduced Senate Bill 3690, which allows debtors to modify residential mortgages to:

• "Cram down" secured mortgage claims to the value of the property;
• Change the loan to a term of 40 years; and
• Change the interest rate to a fixed rate equal to the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, plus a reasonable premium for risk

It was recently reported that Committee Chairman Frank (D-Mass.), in a hearing before the House Financial Services Committee, stated that if banks, mortgage loan servicers, and institutional investors, cannot work towards a solution to reduce home foreclosures, Congress will step in with a legislative fix.

Even if no action is taken during the lame duck session, it is expected that the legislation will be re-introduced and move forward when the new Congress is sworn in this January.

If you have any questions on this information, please contact Mr. John L. Day, Jr., Esq. Mr. Day is a partner in the Bankruptcy Department of the Real Estate Default Group at Weltman, Weinberg & Reis Co., L.P.A. in Cincinnati, Ohio. Mr. Day can be reached at (513) 723-2206 or via e-mail at jday@weltman.com.

Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A., an organization providing comprehensive creditor representation.  The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship.  Contact any of our offices or visit our website at www.realestatedefaultgroup.com for more real estate related information, company facts and attorney profiles. (c)2008