A plan by Democrats to allow bankruptcy judges to rewrite mortgage-loan terms for struggling homeowners as part of the proposed $700 billion Wall Street bailout has the support of some South Florida jurists.
The judges say the proposal would let them lower the interest rate on home loans for borrowers who enter Chapter 13 bankruptcy because of a pending foreclosure. A Chapter 13 allows individuals to reorganize their debts.
Right now, bankruptcy judges can modify the terms of all kinds of loans except those on a first home.
''Since we can't help [homeowners], they end up losing their home and that may mean breaking up their family and putting them out on the street,'' said U.S. Bankruptcy Judge A. Jay Cristol in Miami.
Added U.S. Bankruptcy Judge Laurel M. Isicoff, also in Miami: ''Every bankruptcy judge I've spoken with feels strongly that this is a tool that they should be given.'' She has talked with about 30 judges, she said.
Cristol said the proposal is a ''win-win'' for homeowners and lenders. Homeowners keep their house and lenders have a performing loan rather then getting the keys to a property they'll then have to sell.
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