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On February 23, the House Judiciary Committee and the House Financial Services Committee released details of legislation, H.R. 1106, to implement part of President Barack Obama's plan to address the housing crisis.

According to the Center for Responsible Lending, a new foreclosure starts every 13 seconds—2.4 million are expected this year alone. The negative effects will multiply as neighboring home values drop, draining about $6,000 from each of the 73 million families who happen to live near foreclosed properties.

Efforts to rely on voluntary modifications by lenders have not worked. As foreclosures have gotten worse, the clear benefits of judicial loan modifications have become undeniable.

H.R. 1106 consists of several measures, including allowing distressed homeowners to seek loan modifications in bankruptcy court. It will give homeowners the same right that investors and those that have second homes already have—to get their mortgage modified if they file for bankruptcy.

Other provisions of H.R. 1106 include:

1. Expansion of the ability of the Federal Housing Administration (FHA) to modify loans through the reduction of interest payments.

2. Creation of a safe harbor for mortgage servicers from legal action by the investors who own loans in order to encourage the modification of more loans to affordable debt levels.

3. Amendment of the HOPE for Homeowners Program to provide more incentives for mortgage servicers to engage in modifications under the Program.

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