No Mortgage Relief From Congress

On April 29,2009 the Senate voted down Foreclosure relief that would allow Bankruptcy courts to modify existing home mortgages. This common sense solution to resolve distressed mortgages and help homeowners only received 45 votes. The bill is dead.
So, what can you do if you are behind on your mortgage and facing foreclosure?
First, you can try to work out a forbearance with your mortgage company. This is a voluntary workout that may increase your payment over a short term to cure arrears. The problem is that if you are in trouble with your mortgage, increasing the monthly payment is often the last thing you can afford.
Second, you can attempt a mortgage modification. In this situation, the mortgage company voluntarily agrees to change the terms of your mortgage by possibly dropping the interest rate, putting arrears on the back of the note, or redoing it for 30 years. The problem here is that it is voluntary. No one can force them to offer it.
Third, you can file a Chapter 13 bankruptcy reorganization.(http://www.johnesmithlawoffice.com/types_of_bankruptcies ) The law remains limited in what it can do. The regular monthly mortgage payment remains due each month. No change. The arrears and escrow shortage are spread over a 60 month period. Along with the restructuring of your other debt, this can sometime s afford enough relief to stay in the house.
Fourth, let the house go. The downside to this response is that you will have to move. You will also likely face a deficiency lawsuit to collect the balance of the mortgage not paid by the foreclosure process. Bankruptcy relief for that debt may also be necessary.

The law is currently limited in the relief offered. Unfortunately, unlike all of the fat cats on wall Street, Congress does not feel that individual homeowners are "too big to fail."