The Center for Responsible Lending is proposing a solution to forestall the over 600,000 foreclosures thought to come in the next two years. Their solution is to adjust the Chapter 13 bankruptcies rules so that debts are not eliminated, but instead a repayment plan is made. At the present, with a Ch. 13, judges are able to modify mortgages on investments/second home properties instead of mortgage debt reducement. With the new House bill being made, now the judge would be able to reduce the amount the homeowner owes by reducing the principal amount owed to the current market value of the property in question and by lowering the loan’s interest rate. What remained of the original principal would then be considered ¨unsecured¨ or of lower priority for repayment and as such all unsecured debts can be dissolved. Of course with any potential change, there are those who are for or against it.

CRL supports their stand by saying that loan modification allows lenders to get paid more then with a foreclosure as they get to eliminate the expenses normally incurred in a foreclosure. They feel it has the great benefit of allowing one more family to remain with a home, a secure place of residence. Sam Gerdano, executive director of the American Bankruptcy Institute, did allude to this benefit by saying that at least this would remove the fear of home ownerships and possible problems from potential buyers.,  CRL also feels that more owners being able to keep their homes helps the neighborhood as well, as foreclosures tend to bring down neighborhood home values. CRL also doesn’t feel that this change would increase the number of filing as this change is not a 100% clean slate for the filers: they will have their finances watched, and their credit will be damaged. Some possible downfalls with this plan is that investors take more of a risk as with the plan the court could change the mortgages without lender consent.

The President and CEO of Financial Services Roundtable, Steve Bartlett, says that, "If enacted, [the House bill] could have a de-stabilizing effect on the mortgage markets, which are now begging to stabilize¨. He feels this change would have the heaviest toll on the consumer as less funding would be available due to the mortgage lenders charging higher rates for loans in case they get adjusted later on.