WASHINGTON – The credit union lobby will work to keep the focus on subprime mortgages and try to exempt most credit union loans from a bill that would give bankruptcy courts the power to amend mortgages, that is expected to be voted by the full Senate this week.
The bill would allow homeowners having trouble with their mortgages to file for bankruptcy and have the court restructure the terms of the loan. Bankruptcy courts currently do not have any authority over home mortgages.
NAFCU said it is negotiating with key senators to narrow the definition of what kinds of loans would be eligible for such treatment to include subprime or nontraditional loans, which would exempt the vast majority of credit union mortgages. NAFCU helped craft a similar carve-out for credit unions in a bill that is making its way through the House.
The mortgage bankruptcy bill is expected to be added to a housing stimulus package being crafted by Senate leaders.
