The Wall Street Journal-20080115-Bankers Group Slams Mortgage Bill
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Bankers Group Slams Mortgage Bill
WASHINGTON -- Altering U.S. bankruptcy laws to allow judges to adjust terms of mortgages for troubled borrowers would result in higher costs for all borrowers seeking a mortgage, an industry group said.
The Mortgage Bankers Association said legislation being considered in the House could increase interest rates on all future mortgages between 1.5 and 2 percentage points.
"Congress is, quite laudably, attempting to help consumers who face difficulties paying their mortgages," MBA Chairman-elect David Kittle said. "But this law will, ironically, create future difficulties by increasing mortgage costs."
The legislation, introduced by Rep. Brad Miller (D., N.C.), would allow bankruptcy judges to alter terms of mortgage loans on primary residences during bankruptcy proceedings. Current law prevents such changes from being made.
Homeowner advocates and a growing number of lawmakers have voiced support for changing the bankruptcy laws, despite lenders' objections. The House Judiciary Committee passed Rep. Miller's bill in December; it is one of several housing-related bills the House could consider in the coming months to help deal with the turmoil in the mortgage markets.
