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In Ohio, many find that they cannot repay home mortgage

It is well known in Ohio and other states that the big banks were a major part of the recent recession. This is because they issued home mortgage loans than were well in excess of what many people in our state and elsewhere were able to afford. These types of loans, and the fall of home values that occurred over the past few years, has led many to file for a personal bankruptcy as a means of responsibly confronting their financial problems once and for all.

A new bill that is being considered by Congress could affect how home mortgage loans are offered. The bill is aimed at making big banks retain a higher level of capital as a part of their assets. This higher capital could be important if another recession hits or homes fall prices fall again.

For many in Ohio, home values have remained low, and they have suffered job losses and other financial stress. This has led some to be unable to pay their home mortgage payments. When this happens, some may turn to filing for personal bankruptcy protection. For those folks, the amount of capital held by the big banks is unimportant, though it could help in any future financial crisis.

The decision to file a bankruptcy can help when a person has fallen behind on payments for their home mortgage and is facing a foreclosure action. In such instances, the foreclosure could be forestalled during bankruptcy proceedings, potentially allowing a person time to renegotiate a loan or seek other options. Those that are currently in financial stress may not find the proposed new law helpful for their current problems, but for those who may face similar situations in the future, the law could provide an additional measure of protection for us all.

Source: usatoday.com, "Bill to shrink banks won't pass -- but may help," Darrell Delamaide, April 30, 2013

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