House Panel OKs Bankruptcy Bill
The House Judiciary Committee approved a narrowly targeted bankruptcy bill by a 17-15 vote 12/12/2007 that would give subprime and nontraditional mortgage borrowers facing foreclosure one last chance to get their mortgage restructured so they could stay in their homes.
Only homeowners who have received a foreclosure notice could seek a Chapter 13 restructuring under a compromise worked out between committee Democrats and Rep. Steve Chabot, R-Ohio.
Under the bill, bankruptcy judges could waive prepayment penalties and reduce the mortgage amount to the fair market value and reduce the interest rate to a conventional rate plus a risk premium.
This restructuring would be limited to both subprime mortgages and nontraditional mortgages originated from 2000 through the date of enactment of the legislation.
The Mortgage Bankers Association and the American Bankers Association oppose the bill.
Tags: Foreclosure Market, Mortgage Bankers Association, Mortgage Defaults, Subprime Implosion, Subprime Mortgage Industry
