WASHINGTON — Congress last week was getting a mixed message from credit unions when it comes to support legislation related to so-called mortgage "cramdowns."
NAFCU said its board had unanimously voted against any support for changes in rules to allow judges to make changes in principal and interest rate payments on mortgages in cases of bankruptcy, until more information is forthcoming. The House has already passed cramdown legislation (HR 1106) and Sen. Richard Durbin (D-IL) has been leading the effort in the Senate to strike a compromise among major banks, bank trade associations, and CUs on companion legislation.
CUNA reacted quickly to NAFCU's announcement, with CEO Dan Mica issuing a statement that "This is not the time to merely walk away; there is too much at stake for credit unions," said CUNA President and Chief Executive Dan Mica in a statement.
NAFCU's opposition is based, according to CEO Fred Becker, on what it says is a lack of "details" on how the legislation will address "modification and work-out plans for subordinate liens, as well as how this legislation and new bankruptcy authority would impact existing Private Mortgage Insurance contracts."
Becker added that NAFCU's position is based on the proposal "at this juncture," and indicated its position might change pending additional details.
CUNA described itself as "surprised" by the NAFCU opposition, saying "we thought that association had always opposed the House version of cram downs, as CUNA has."
CUNA said it remained in "good faith negotiations" with Durbin and his staff to "refine the legislation so that it does not punish credit unions, which did not contribute to the housing crisis."
"This is not the time to merely walk away; there is too much at stake for credit unions," CUNA said last week.
Credit unions opposed the House version of the cramdown legislation arguing that it allowed to much opportunity for borrowers to "game" the system.
