The House is expected to take up mortgage bankruptcy reform this week in a housing package designed to reduce foreclosures and improve bank liquidity.
The legislation by House Judiciary Committee Chairman John Conyers, D-Mich., and House Financial Services Committee Chairman Barney Frank, D-Mass., includes a bill the Judiciary Committee approved Jan. 27 that would let bankruptcy judges cram down mortgage debt and restructure loan terms to prevent foreclosure.
Despite Citigroup Inc.'s support for bankruptcy reform, the rest of the banking industry remains opposed to it.
The bill has been revised to satisfy at least one industry concern — government-insured mortgages, like those backed by the Federal Housing Administration, would be allowed to cover a lender's loss when mortgage debt is crammed down.
The new bill also includes three measures Rep. Frank cleared through his committee Feb. 4 that would address liquidity and foreclosure issues.
The legislation would make permanent the temporary increase in deposit insurance coverage to $250,000 per account; indemnify servicers that modify loans from investor suits; and seek to improve the Hope for Homeowners program to make it more attractive for lenders.
The House is likely to take up the bill Thursday.
The Senate has not scheduled a vote.
