WASHINGTON — The House Judiciary Committee approved legislation 21 to 15 that would let bankruptcy judges discharge mortgage debt to prevent foreclosures.
The bill cleared the committee along party lines and did not change much despite hours of debate and numerous attempts to amend the version Committee Chairman John Conyers laid out early Tuesday.
The bill does include changes sought by Rep. Brad Sherman, D-Calif., including one that would let lenders recoup losses if a homeowner sells his home within four years of a bankruptcy cramdown.
In a brief interview after the vote Rep. Conyers said he wants to attach the bill to a must-pass appropriations bill.
Whether the bill would change more before that step he simply smiled and said, "It's always possible."
One point the Michigan Democrat cleared up: FHA loans are covered by the bankruptcy protection. "FHA is included,” Rep. Conyers said. “They're eligible for a cramdown."
The committee approved an amendment 21 to 3 by Rep. Steve King, R-Iowa, that would seek to eliminate fraud by stipulating a borrower could not benefit under bankruptcy if he misrepresented himself or committed fraud.
Separately, House Financial Services Committee Chairman Barney Frank told reporters he plans to hold a hearing next week on a housing package that would be coupled with the mortgage bankruptcy measure.
Rep. Frank said after holding a hearing he would move quickly to a committee vote on the housing package before attaching it to an omnibus appropriations bill expected to move after the economic stimulus package.
Rep. Frank's housing bill would remove hurdles to the Federal Housing Administration's Hope for Homeowners refinancing program. It would also make permanent the temporary increase in federal deposit insurance to $250,000, and would increase the Federal Deposit Insurance Corp.'s borrowing authority to $100 billion from $30 billion as Chairman Sheila Bair has requested. The bill would also provide additional clarity to protect servicers from investor suits when conducting loan modifications.
Rep. Frank also told reporters that after the housing bill he plans to act quickly to move the first part of regulatory reform legislation to address systemic risk regulation; the Federal Reserve Board is likely to get that authority.
"The administration would like to get something in place by the G-20 meeting" in April, he said.