WASHINGTON — CUNA wrote a letter last night stating that while it supported Senator Dick Durbin's (D-Ill.) amendment to the Foreclosure Prevention Act of 2008, it still could use some modification.
The amendment would allow bankruptcy judges to alter the terms of a subprime or "nontraditional mortgages" in bankruptcy proceedings. The amendment would also provide for a means test. According to CUNA's letter, it would also give the judge "authority to reduce the "allowed secured claim" to an amount no lower than the current value of the house."
"The definition in Section 410 of a non-subprime "nontraditional mortgage" is of particular interest to CUNA, and we are pleased that the Durbin amendment recognizes that some lenders, in particular credit unions have made suitable interest-only loans, that legitimately factor in the borrower's ability to repay," CUNA President/CEO Dan Mica wrote.
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CUNA did seek to modify the amendment to allow a homeowner facing foreclosure to file for bankruptcy and then obtain counseling within a reasonable period. Additionally, CUNA asked for clarification of a provision that appears to apply to all lenders regarding undefined consumer protection laws.
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