Legislative Proposals to Amend the Bankruptcy Code to Modify Loan Terms


Proposed changes to the bankruptcy laws that would allow bankruptcy judges to change unilaterally the terms of many mortgage loans, including the loan balance, as part of Chapter 13 bankruptcy proceedings, would, MBA believes, increase mortgage rates by at last one and a half points. By granting judges this power, it would throw into question the value of the collateral that backs every mortgage made in this country -- the home. Even a temporary change would be interpreted by the market as an additional risk, which lenders' prices must reflect.

In addition, lenders will be forced to require higher down payments and charge higher costs at closing. All these increased costs would be necessary to account for the new risks that lenders will face when judges decide to change how much borrowers owe on their mortgages.

For more information, please see MBA's Cramdown Issue Brief.

Issues Update
Date
3/8/2009 MBA Chairman David Kittle's Op-Ed in the Atlanta Journal-Constitution
3/6/2009 Letter to MBA Members on House Passage of the Helping Families Save Their Homes Act
2/26/2009 MBA Summary of H.R. 1106
2/24/2009 MBA Letter, Oppose Bankruptcy Cramdown Provisions in H.R. 1106
2/24/2009 Joint Letter, Oppose Bankruptcy Cramdown Provisions in H.R. 1106
1/27/2009 Joint Letter, Opposition to Cramdown
1/22/2009 Joint Statement for the Record, Bankruptcy Cramdown
1/13/2009 HUD Responds to Cramdown: Shares MBA's Views
1/9/2009 Joint Letter, Opposition to Cramdown
12/16/2008 MBA Answers Senator Durbin's Question on Bankruptcy
12/16/2008 MBA Responds for the Record: Bankruptcy
11/19/2008 MBA Testifies on Bankruptcy Cramdown
4/22/2008 Joint Industry Coalition Advertisement: Bankruptcy Cramdown Would Hurt
4/10/2008 MBA Policy Correspondence: Letter to Congressman Frank on H.R. 3609
4/1/2008 Op-Ed by MBA Chairman David Kittle, CMB - Bankruptcy reform wrongly peddled as housing-crisis fix
3/31/2008 Joint Industry Letter to Senate Regarding Mortgage Bankruptcy
3/25/2008 Experts on Cramdown
3/5/2008 MBA Policy Correspondence: Letter to Senate Judiciary Committee
2/27/2008 Bankruptcy is a last-ditch resort not a first-rate remedy
2/26/2008 Statement of Administration Policy on S. 2636
2/15/2008 Letter to Reid & McConnell Opposing S. 2636
2/15/2008 CRS Report on Proposals for Legislation to Impose an Interest Rate Freeze/Reduction on Existing Mortgages
1/29/2008 MBA Testimony: Growing Mortgage Foreclosure Crisis: Identifying Solutions and Dispelling Myths
1/28/2008 MBA Policy Correspondence: Letter to Speaker of the House
1/23/2008 Joint Industry Letter to House Regarding Mortgage Bankruptcy
12/11/2007 Bankruptcy Coalition Letter in Opposition to H.R. 3609
12/4/2007 MBA Policy Correspondence: Letter to Senate Judiciary Committee
11/6/2007 Former Regulators Letter to House Judiciary Committee
10/30/2007 MBA Testimony: H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007
10/15/2007 MBA Policy Correspondence: Letter to House Judiciary Committee
10/5/2007 MBA Policy Correspondence: Oppose H.R. 3609
9/20/2007 House of Representatives Bankruptcy Bill, H.R. 3609