May 2009 Post Archive

May 20, 2009

Congress passes the "Helping Families Save Their Homes Act"

Although the bill to allow bankruptcy judges to modify loans on primary residences was defeated this month, Congress passed the "Helping Families Save Their Homes Act". This bill encourages lenders to modify an individual's mortgage if the homeowner agrees to pay an insurance premium. The loan modification would exchange the borrower's high interest or variable rate for a lower 30-year fixed rate backed by the FHA. The program is set to expire in 2011. This bill has been sent to President Obama for review.

May 20, 2009

Tax consequences of S Corp. bankruptcy

S corporations can file for bankruptcy, however, it pays to consult a tax attorney prior to filing since shareholders can be taxed for any gain resulting from the sale of the corporation's assets, even though the shareholders do not benefit from the sale since the proceeds are used to pay off the corporation's creditors.

May 14, 2009

Banks: 1; Borrowers: 0 -- Senate Defeats Mortgage Modification Measure

A measure to allow bankruptcy judges to re-write the terms of mortgages on principal residences died in the Senate. This is particularly frustrating in light of the current overwhelming numbers of home foreclosures. Bankruptcy judges are allowed to change the terms of many other types of loans, inluding those on second homes, also known as "cram down". The fact that this measure failed just shows that the banks are still running Capitol Hill. I guess the $56 million dollars the banks spent lobbying Congress really paid off for them. I wonder if any part of that money was from the bailout funds?