I had hoped to see bankruptcy judges given power to modify mortgages in Chapter 13 bankruptcy.  The new bankruptcy law, however, failed to gain enough senate votes. 

Meanwhile, the administration announced new measures of its own to help homeowners avoid foreclosure. These government initiatives are designed to help sell homes that are worth less than the amount of the mortgage, or to help transfer ownership of the home to the lender. In neither case does the homeowner get to stay in the home.  The somewhat saving feature of these plans is that homeowners' credit scores suffer a little less damage than with a foreclosure. A couple dozen lending companies have so far signed up to participate in the program, including Wells Fargo and JPMorgan Chase.  For each loan they modify, the companies will be paid an incentive fee by the government.

As part of my work as an Indiana bankruptcy attorney, I am often involved in discussions about mortgage decisions and foreclosure options.  For the month of April, I learned, the rate of foreclosures actually dropped 2% compared with the previous month.  The state of Indiana is now 15th in the U.S. in terms of foreclosure filings.  Still, the foreclosure situation continues to be very serious.  Foreclosures and "short sales" made up a third of all homes sold in and around Indianapolis last month!

That means that, despite the fact that bankruptcy courts were not empowered to modify mortgages, as a bankruptcy attorney in Indiana I need to keep up with all developments in the mortgage markets.  As I work with each client, we need to discuss all the options available to them.  Since there are deadlines and timetables associated with a foreclosure, time is of the essence in keeping different options open. I've often stressed in my Indiana bankruptcy blog how absolutely crucial it is to seek legal advice as soon as you begin having problems keeping up with your mortgage.