WASHINGTON – Democratic leaders agreed yesterday to vote the so-called mortgage cramdown bill as part of deposit insurance reform, ensuring a difficult time for a conflicted credit union lobby as the bill moves to a vote by the full House next week.
At the same time, credit unions were working with key senators on an effort to restrict the cramdown on mortgages in bankruptcy court to subprime and other non-traditional mortgages, after the bill moves over from the House. "This is one of the things we’ve wanted and have been asking for for some time," said Ryan Donovan, senior lobbyist for CUNA.
In an effort to mute the opposition by the powerful banking and credit union lobbies, House leaders attached the cramdown bill, which would allow troubled homeowners to ask the bankruptcy court to modify their mortgages, to the deposit insurance bill, which makes permanent the rise in coverage to $250,000 per account.
The deposit insurance bill has an added sweetener for credit unions, a provision that would allow NCUA to stretch out the $5 billion corporate credit union bailout to as long as five years, making it virtually impossible for credit unions to oppose the bill.
But the credit unions and banks have united, as they did for passage of bankruptcy reform, to lobby for limits on the cramdown bill to subprime and other alternative mortgages. The effort comes as more than 4,000 credit union executives and directors were converging on Capitol Hill as part of CUNA’s annual Government Affairs Conference, and while seven banking groups, headed by the American Bankers Association, were also uniting to fight the cramdown bid.
"NAFCU continues to believe the two bills should be separated, with the cramdown being limited further in scope," said NAFCU President Fred Becker last night.
"We are pleased to see recent comments from Sen Durbin and Sec Donovan that indicates a possible modification of the bill in the senate toward what NAFCU has been advocating for the past couple years," he said, referring to Democrats Richard Durbin of Illinois and HUD Secretary Shaun Donovan.
