Sub-prime mortgages not protected by bankruptcy laws

Under current law, subprime homeowners have two choices: they can get a loan modification, or they can lose their home through foreclosure.? Bankruptcy – the traditional option of last resort– is virtually useless, because current law prevents bankruptcy courts from assisting with the very debt that is causing the problem today – the mortgage on the family home.?

Approximately four million families are facing monthly mortgage payment increases of 40% or more on exploding subprime ARMs.?? Subprime lenders routinely promised these homeowners that they would be able to refinance, but that option is rapidly disappearing due to declines in property values, prepayment penalties, and the disappearance of subprime lenders.?? Trapped borrowers can try to sell their house, but these days it often does not sell for enough to pay off the mortgage.?