House Committee Passes Mortgage Reform Act

The House Judiciary Committee has passed limited mortgage reform legislation. The bill, H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act, is the first step to giving homeowners with sub-prime mortgages a much needed break.

Maureen Thompson, Legislative Director for the National Association of Consumer Bankruptcy Attorneys, states:

"Though the bill is more limited than we hoped, it nonetheless will provide a bankruptcy remedy for many hundreds of thousands of homeowners where none exists today."

The bill is expected to come before the full House as early as February and even in its watered down form is expected to meet stiff opposition.

Some of the highlights of the bill are:

1. The bill covers only existing loans made after 1/1/2000 and will have no effect on new loans.
2. Covers nontraditional loans and subprime loans only.
3. Applies only to loans where there is a notice of foreclosure.
4. Sunsets after 7 years.
5. Provides guidance to judges so they cannot cramdown value below fair market value and cannot reduce interest rate below conventional mortgage rate.

The Senate Judiciary Committee also is expected to take up S. 2136, Senator Durbin's bill, in February.