An up-to-date centralized reporting mechanism on foreclosure properties and loan modifications across the U.S. will be created if a proposal to require the mortgage industry to make updated foreclosure reports is enacted.

The proposal to track foreclosed homes reliably is included in the House bankruptcy bill which is set to be discussed in the Senate.

A recent report from the Congressional Oversight Panel, headed by Elizabeth Warren, pointed out the lack of reliable data on foreclosures, such as number of foreclosure properties, causes of foreclosures and the results of foreclosure mitigation programs. The report highlights the failure of housing and federal banking agencies to collect and analyze foreclosure data despite the fact that the country is now 2 years into the housing crisis.

Representative Brad Miller, who introduced the foreclosure data gathering provision together with fellow Democratic Representative Elijah Cummings, said he has been campaigning for the tracking of foreclosure properties for over a year. But the mortgage industry has been blocking his efforts to call for accurate reports on foreclosure properties.

Miller also said he is starting to doubt the foreclosure numbers released by the Mortgage Bankers Association and other trade groups because they do not want government help in data gathering.

Another economist concerned about the state of foreclosure data gathering is Dean Baker, who is working with the Center for Economic and Policy Research. He said the banks prefer the status quo — lack of reliable data on foreclosure properties — because they do not like to show how troubled they really are.

Miller reiterated that reliable data on foreclosure properties and loan modifications are needed so Congress would know the number of foreclosure properties, the number of modifications, details on the modifications and the re-default rates.

Representative Cummings wonders why many homeowners whose loans have been modified are re-defaulting. According to one report, roughly half of those modified loans had their amounts increased instead of having them reduced.

The media has been relying on foreclosure tracking firm RealtyTrac, which releases its report on foreclosure properties monthly. Analysts point out that RealtyTrac monitors foreclosure filings based on court records and excludes other important information on the loans. They also said that RealtyTrac’s tracking method overstates figures on foreclosure properties because it counts foreclosure filings when there can be more than one filing on a certain property.

Anyone of these options is bound to stick to your credit report for many years. It will come up when you apply for a credit card or even when you purchase a car or home. Being considered a credit risk will naturally mean higher interest rate for you.

If you are already having trouble making ends meet, you should probably try to really look at your finances. You will be probably surprised that there are plenty of ways that you can cut back your spending. If you are already living on a very lean budget, the next thing you should consider is looking for other sources of income. You could also ask for some financial assistance from your family or friends especially if your financial woes are not for long term.

Of course, there is always the option that most distressed homeowners choose and that is to negotiate with their lenders in order to come up with a new repayment plan for your mortgage loan. This option should only be explored if you have determined that you can afford your home. You should really not hold on to your home if your finances do not permit it. You will probably end up losing your home to foreclosure, paying huge amount in taxes and on top of it all, filing for a bankruptcy.

For distressed homeowners who think that bankruptcy is the only way to go, it is best that you consult a lawyer. You will need to first determine which between Chapter 7 and Chapter 13 Bankruptcies suit your financial situation. If this option works out for you and you are given a fresh start, you must make sure that you do not make the same mistakes all over again.

As experts always say prevention is better than cure. You should work hard in trying to stay away from a bankruptcy or foreclosure.

Filing for bankruptcy has always been considered as a last resort. This means you must have exhausted all the other options that could stop foreclosure. If not, then you should not even be thinking of bankruptcy at all. You must realize that a bankruptcy entry on your credit report can last for ten years.

If in case you are at the end of your rope and seriously considering filing for bankruptcy, here are some information on the two basic types of foreclosure bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

Chapter 7 Bankruptcy
If your financial problems are for long term then a straight up bankruptcy might be better. A Chapter 7 bankruptcy will not involve any repayment plan at all. This means you will be losing your home to foreclosure permanently. All the assets that you have left will be used to pay for all your debts including mortgage loans. Of course, the bankruptcy court will have to determine whether or not you are eligible for this type of bankruptcy.

Chapter 13 Bankruptcy
In this kind of bankruptcy filing, an individual will be able to stop foreclosure without having to leave his home. A Chapter 13 Bankruptcy will involve a repayment schedule that will be spread from three to five years. This Bankruptcy filing is ideal for individuals who are still expecting a regular income and just suffered some temporary financial difficulties.

Bankruptcy can be quite effective in stopping foreclosure but there are negative consequences that come with it. You can still try to explore an out-of-court agreement with your debtors before finally deciding on filing for bankruptcy.

The Foreclosure Prevention Act of 2008 is built in large part around a measure that seeks to stem foreclosures by changing what happens legally when a homeowner declares bankruptcy. The statute would award power to certain bankruptcy judges that would allow them to waive portions of certain debts based on their discretion of the situation, in an attempt to allow homeowners facing bankruptcy to avoid foreclosure and keep their homes.

But in addition to drawing heat from Senate Republicans, there are many concerns coming from all sides about what the new bankruptcy measures will mean for homeowners, the housing industry and the foreclosures market at large. One concern is the measures banks and lenders will take to avoid losing money on loan debts that might be waived due to bankruptcy. Some lending institution figures have discussed imposing a bankruptcy premium on certain loans that are considered risky, and others are promising to fight long court battles to regain any money denied them by the new measure.

Critics also say that bankruptcy law reform should work more towards helping homeowners pay off their debts over time rather than escape them. Already, many cite the fact that homeowners are allowing their homes to go into foreclosure and walk away, while banks and other lenders are stuck with trying to sell the properties to regain the money lost on the loan. However, with the foreclosure market surging, there are simply too many bank foreclosure homes out there to have any sold at a reasonable price, and so many of these homes are simply being awarded to banks and lenders as collateral that they then attempt to sell off on their own time.

The bankruptcy surge and this phenomenon however has led to create some interesting bank foreclosure homes buying opportunities for investors who are looking to capitalize. Since selling real estate is not a primary concern of banks and lenders, they will be looking to unload bank foreclosure homes even if it means they’ll only get a good portion of the money lost on the loan to bankruptcy back. Many bank foreclosure homes are sold by lenders for 10-50% below their market value, and while this is often a loss for the lenders, it is a huge gain for savvy homebuyers and investors.

Senate Majority Leader Harry Reid recently announced that if Bush were to veto the new bill, he would seek to overturn that veto in the Senate. Citing the drastic need for some kind of change in the housing situation, Reid announced that he believes the bill will be important for easing debt among defaulted homeowners.

During the debate of the bill in the Senate, which is expected to take place either today or tomorrow, Reid will allow amendments to be added to the bill, but stressed that it is important to take into account the housing crisis only, which is a very pressing issue, instead of adding on other controversial items such as an estate tax reform, which has been a hotbed issue among many republican senators.

The biggest problem that the Republicans have with the proposed bill however is a provision that would allow certain bankruptcy judges to move to strike portions of debt for homeowners in default. The bill would also establish a $4 billion fund that would be available to lenders for buying up foreclosed and abandoned properties. Foreclosed homes and abandoned homes are seen as major detractors of property value, and the more of them on the market, the less likely it is that the market will be able to rebound anytime soon. The logic is that by buying up these homes, lenders will be able to alleviate their losses and help the market stabilize.

However, Bush and the republicans see this as unfairly bailing out the lenders from their own debt using federal money.

This issue will surely be a hot one in the housing market for some time. It is the first major bill to come forward to address the foreclosure situation, but it has sparked debate on several others, including one currently working its way through the House of Representatives.

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