Lobbyists are hearing that the House Judiciary Committee wants to tack a bankruptcy cramdown amendment onto the massive regulatory reform package that the House of Representatives will debate and vote on this week.
The House Rules Committee will decide on Tuesday which amendments will be in order when the House starts debate Wednesday on the Wall Street Reform and Consumer Protection Act (H.R. 4173). The House passed a cramdown bill (H.R. 1106) in March by a 234-191 vote that would allow bankruptcy judges to reduce or cram down the principal amount of a homeowner’s mortgage.
It is unclear if Judiciary Committee Democratic leaders want to attach all of H.R. 1106 to the regulatory reform bill or offer a narrower cramdown amendment.
Meanwhile, a coalition of lender groups are hoping the Rules Committee will accept an amendment that would create a category of mortgages that are exempt from the risk retention requirements on sales and securitizations of mortgages. H.R. 4173 currently gives the regulators the discretion to set risk retention requirements as high as 5% on most mortgages.
The coalition-backed amendment would give the regulators the option to totally exempt Federal Housing Administration, Fannie Mae, and Freddie Mac mortgages from risk retention.
