The Mortgage Bankruptcy Bill was passed by the U.S. House on Thursday by a margin of 234-191. With the passage of the bill, bankruptcy judges will now be able to increase terms, reduce interest rates and lower the principal owed by the bankrupt borrowers. Modification in the bill has made it more lender friendly, as borrowers now have to certify that they furnished their mortgage lenders with all necessary financial information.
Furthermore, if a property is sold before the completion of a five-year bankruptcy repayment plan, the lenders have to be reimbursed for a portion of the loss. The Federal Deposit Insurance Corp.'s insurance on bank deposits has also been increased permanently to $250,000 through the Mortgage Bankruptcy Bill.