Nancy Pelosi Says Bankruptcy Law Changes Are Top Priority

Dow Jones reported yesterday that Congressional Democrats could move quickly to alter U.S. bankruptcy laws to help struggling homeowners, the top House Democrat said Thursday, possibly moving legislation as part of the economic stimulus package despite opposition from banking groups.

House Speaker Nancy Pelosi, D-Calif., described as a top priority changing bankruptcy laws to allow judges to alter the terms of mortgage loans to help borrowers stay in their homes. She said the legislation could be advanced either as a stand-alone bill, or as part of a wider package such as the economic recovery plan.

The legislation would allow mortgage loans to be changed to reduce the interest rate, change adjustable rate loans to fixed loans, reduce the principal balance of the loans to the value of the house, and extend the term of the loans up to 40 years.