Homeowners could have a new ally in the fight to keep their homes in the face of rising foreclosures around the Chicago region.
Illinois Senator Dick Durbin is pushing through his proposal to allow bankruptcy judges to have more power over terms of mortgages facing foreclosure. According to the plan, judges would be able to lower interest rates on primary residences in order to lower payments for cash-strapped homeowners.
The proposal comes on the heal of the highly touted plan by the Bush Administration that calls for banks to freeze rates on adjustable-rate mortgages.
However, for many banks and lenders, the idea that judges and government officials can rewrite mortgage contracts could result in higher interest rates for the rest of us in the long run. As banks face more uncertainty, they could begin to charge everyone higher rates to offset the losses from riskier mortgages that have been reset to lower rates.
However, for the thousands of homeowners around Chicago and millions around the country facing foreclosure, the news couldn’t come at a better time. If successful, many Chicago Homes currently facing foreclosure could be saved from the auction block.
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