WASHINGTON – Mortgage lenders, including credit unions and banks, convinced the House Judiciary Committee last night to postpone a vote on a bill that would give bankruptcy judges the power to amend the terms of mortgages during the bankruptcy proceedings.
The lender groups told lawmakers the bill could create as many as 500,000 new bankruptcy filings by troubled homeowners hoping to get relief from the courts. NAFCU told committee members the bill would create greater uncertainty in the troubled mortgage market, increasing the cost of credit for all borrowers.
Current law allows lenders to voluntarily amend the terms of a mortgage during a Chapter 13 bankruptcy, but few do so. And under current law, a bankruptcy judge can't force the lender to modify the terms of a loan.
