Republican Signs On To Bankruptcy Bill

Republican Rep. Steve Chabot has signed on to a bill being considered in the House Judiciary Committee Wednesday that would alter bankruptcy laws to help shield homeowners from foreclosure.

This legislation represents the next step in the congressional response to the housing crisis spurred by a spate of bad debt and over-inflated home prices.

Chabot's support gives the Democratic authors of the bill some of the political cover they need to move it to the House floor.

“This legislation is a necessary compliment to the legislation passed by the House earlier this fall and to the Administration’s plan announced last week," Chabot said in a statement released by Judiciary Committee Democrats. "I urge members on both sides of the aisle to support relief for those families who are struggling to keep their homes.”

The bill, which was authored by California Reps. George Miller and Linda Sanchez, would allow qualified homeowners who file for bankruptcy to re-value their homes to reflect the fading real estate market, avoid paying "excessive and often secret fees," reduce "exborbitant" interest rates and avoid some repayment penalties completely.

The legislation would apply to homeowners who took out sub-prime or interest-only loans after January 2000 through the date of its potential enactment.

“If a homeowner can’t pay a predatory mortgage but can pay a fair mortgage, the homeowner should have the same rights in bankruptcy that a business has," Miller said in a statement. “This legislation will let more than half a million American families escape losing their homes to foreclosure."