Abstract
The record number of foreclosures in 2007 and 2008 is threatening homeownership as a fundamental institution of American middle-class life. The inability of millions of families to afford; the strain housing costs place on th~ir incomes is a driving factor in the foreclosUre crisis. While chapter 13 bankruptcy offers families the opportunity to repay arrearages on their mortgage loans in a repayment plan, this relief does not address the ongoing struggle with loan affordability that resulted from the loose underwriting standards and nontraditional loan products that characterized the mortgage market in the last several years. The Mortgage Study data show that even in 2006, before the height of the current foreclosure crisis, .more than seven· in ten homeowners in bankruptcy had mortgage payments and related housing c~sts that exceeded income affordability standards. Repealing the prohibition on modifying home mortgage loans in bankruptcy would improve the effectiveness of chapter 13 bankruptcy as a homesaving device and reduce the economic and policy consequences of the foreclosure crisis by giving millions of families a chance to save their homes.
Recommended Citation
Eggum, John
(2008)
"Saving Homes in Bankruptcy: Housing Affordability and Loan Modificatio,"
Utah Law Review: Vol. 2008:
No.
3, Article 9.
Available at:
https://dc.law.utah.edu/ulr/vol2008/iss3/9