Number: RL34301
Title: The Primary Residence Exception: Legislative Proposals in the 110th Congress to Amend Section 1322(b)(2) of the Bankruptcy Code
Authors: David H. Carpenter, American Law Division 
Abstract: The recent downturn in the housing market has likely played a role in the rise of late mortgage payments and foreclosures occurring across the country. Some in Congress expect it will lead to increased filings for bankruptcy. Additionally, there are a number of obstacles, such as legal liability, tax regulations, and accounting standards, that may discourage mortgage servicers and creditors from performing loan modifications in advance of a petition for bankruptcy, even in situations in which a modification would be the most economically beneficial outcome for most interested parties. Allowing modification of debts secured by the debtor's primary residence in bankruptcy may encourage the provision of modifications prior to default or delinquency. As a result, at least six bills seeking to amend Section 1322 of the Bankruptcy Code have been introduced in the 110th Congress. These bills are H.R. 3609 (the Emergency Home Ownership and Mortgage Equity Protection Act), which was ordered to be reported favorably by the House Judiciary Committee; S. 2133 and H.R. 3778 (the Home Owners Mortgage and Equity Savings Act, or HOMES Act); S. 2136 (the Helping Families Save Their Homes in Bankruptcy Act of 2008); S. 2636 (the Foreclosure Prevention Act of 2008); and S. 3690 (the Homeowner Assistance and Taxpayer Protection Act). This report provides an overview of the general Chapter 13 process and analyzes how these six bills seek to amend certain sections of Chapter 13.
Pages: 10
Date: November 19, 2008