Senate Kills Proposal to Allow Bankruptcy Judges to Rewrite Mortgages
A controversial proposal to allow bankruptcy judges to rewrite homeowners’ mortgages has died in the Senate.
Sen. Richard Durbin had backed the bankruptcy change, but he agreed to table the proposal so it would not threaten a larger bill to help struggling homeowners, the New York Times reports. Lenders and several Republican lawmakers had opposed the bankruptcy change, citing fears it would increase mortgage rates.
The Senate bill provides tax breaks to some homeowners and new homebuyers. Homeowners who don’t itemize their income taxes would be allowed take a standard property tax deduction of up to $1,000 for couples and $500 for individuals. Those who buy foreclosed homes in the first year after the legislation passes would get a tax break of $7,000 over two years, the Washington Post reports.
The bill also would make $10 billion in tax-exempt bonds available for local housing agencies to refinance subprime loans and give mortgages to first-time home buyers, the Times story says. And it provides $4 billion in grants for local governments to buy foreclosed properties and $100 million for mortgage counseling.
