New Law Would Allow Bankruptcy Judges to Restructure Risky Mortgages

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

Supporters of a proposed new bankruptcy law to allow bankruptcy judges to restructure some risky home mortgages on the verge of foreclosure made a renewed pitch for H.R. 3609 at a hearing yesterday before the House Judiciary Commercial and Administrative Law Subcommittee, CongressDaily reported today. Movement on the bill has been stymied by lobbyists from mortgage lenders, who contend the bill could increase loans by as much as 2 percent because banks would be unsure whether they could generate sufficient profits if loans could be later rescinded.

The full House Judiciary Committee approved the bill by a 17-15 vote Dec. 12, but Judiciary Chairman John Conyers (D-Mich.) took the rare step of scheduling another hearing on the bill to bolster support. Bill sponsor Rep. Brad Miller (D-N.C.) sponsor of the bill, conceded that supporters do not have a hard count on the bill because most members have not focused on it, but he said they are focusing their efforts on a member-by-member basis and lobbying leadership to set a floor date.