Distressed homeowners fight foreclosure by taking their lenders to court
Homeowners who feel they've been treated unfairly by lenders are fighting back. Some are bringing lawsuits in hopes of forestalling losing their homes or freeing themselves of what they believe are onerous borrowing terms. Occasionally they take a do-it-yourself approach, using free online legal documents to file their cases. One common tactic is pressing to have mortgages "rescinded," which allows consumers to cancel their loans if lenders violated the Truth in Lending Act by failing to, among other things, clearly state loan costs and terms.
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Threat of judges changing mortgage terms may motivate lenders
Last week, President Barack Obama unveiled a $75 billion housing plan to bail out some of the country's most endangered homeowners.
One provision of the plan is great news, some lawyers and consumer advocates say. It would allow bankruptcy judges to modify the terms of mortgages.
Under such "judicial modifications" of home mortgages, judges would have the power to reduce mortgage loan balances for the primary residences of consumers who file for bankruptcy. They could also extend the term of the loan and reduce the interest rate "when families run out of other options," according to the Obama plan.
Legislation that would amend the U.S. Bankruptcy Code to give judges modification power is expected to be taken up by the House of Representatives this week.
Supporters of the effort say that such a change would give consumers who file for bankruptcy much-needed relief and give lenders more incentive to work with distressed homeowners before they seek help from a bankruptcy judge.
"At a time when an estimated 6,600 American families are losing their homes to foreclosure every day.
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Economists see deeper recession, upturn starting this year
A survey of leading economists finds them now forecasting a far deeper and more painful recession ahead in the first half of the year, but a modest pickup in the second half of 2009, followed by a solid recovery in 2010.
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