WASHINGTON – Major parties have apparently worked out a compromise that would exempt the vast majority of credit union loans from legislation to allow bankruptcy judges to adjust the terms of troubled mortgages.
An initiative crafted by NAFCU and apparently agreed to by consumer groups, including the Center for Responsible Lending, as well as congressional leaders, would exempt all non-subprime mortgages from the bankruptcy-court adjustments and only apply to loans currently in foreclosure and already in effect.
The support of the Center for Responsible Lending is seen as critical to the compromise because the Center, an affiliate of Self Help CU, has emerged as a major lobby that is blazing the way in Congress on behalf of consumer legislation such as the mortgage bankruptcy bill.
One source said the compromise would exempt more than 95% of all credit union mortgages from the bill. "This drastically limits the scope of the bill," one lobbyist told The Credit Union Journal this morning.
The banking lobby is expected to oppose the compromise because banks have far more subprime mortgages on their books which would could still be dragged into the bankruptcy courts under the bill.
The compromise is expected to be offered by Rep. John Conyers, the chairman of the House Judiciary Committee, when the panel votes the bill tomorrow.
