A controversial Senate Bill that will allow judges to modify the terms on existing mortgage loans could hit the U.S. Senate floor as early as Tuesday, Reuters news agency said late last week.

The Foreclosure Prevention Act of 2008 is backed by Senator Harry Reid (D-Nevada) and other Democrats, but continues to draw criticism from industry associations that believe loan modifications from the bench could prove detrimental to homeowners later on.
The Mortgage Bankers Association (MBA) supports part of the push for reform, but remains concerned over the new role judges will play if the bill is passed.
“However, by including language to reform bankruptcy and allow judges to modify mortgage contracts, the bill threatens to hurt those it is designed to help,” said MBA Chairman Kieran Quinn. “Bankruptcy reform will increase the cost of mortgage credit for all borrowers at a time when we ought to be making it easier, not harder, to get credit. As long as this consumer-unfriendly provision is included, we cannot support the package as a whole.”