ABI’s Legislative Committee will present a panel discussion addressing pending legislation in Congress, specifically bills that redefine the treatment of home mortgages in bankruptcy, as well as bills that impact student loans and employee pensions. Participating on the panel will be Susan Jensen, who serves on the staff of Rep. John Conyers (D-Mich.), House Judiciary Committee Chairman, and David Lachmann, who serves on the staff of Rep. Jerrold Nadler (D-N.Y.), a member of the House Judiciary Committee. Moderating the panel will be Hon. George Paine, U.S. Bankruptcy Court for the Middle District of Tennessee, and Hon. David W. Houston, III, U.S. Bankruptcy Court for the Northern District of Mississippi.
Legislation Addressing the Treatment of Residential Mortgages in Bankruptcy and Other Legislation Affecting Bankruptcy Issues
by: Hon. David W. Houston, III
U.S. Bankruptcy Court (N.D. Miss.); Aberdeen, Miss.
by: Hon. George C. Paine
U.S. Bankruptcy Court (M.D. Tenn.); Nashville, Tenn.
H.R. 3609. This bill, entitled the “Emergency Home Ownership and Mortgage Equity Protection Act of 2007,” was introduced by Rep. Brad Miller (D-N.C.) and Rep. Linda Sanchez (D-Calif.) on Sept. 20, 2007. A hearing was conducted on this bill before the House Judiciary Subcommittee on Commercial and Administrative Law on Sept. 25, 2007, and the bill was “marked up” on Oct. 2, 2007. It contains provisions that would permit the modification of a claim secured exclusively by a debtor’s residential real property; it would eliminate the requirement of credit counseling for debtors facing foreclosure; and it would require that post-petition fees and charges in a chapter 13 bankruptcy case, relative to a claim secured by a debtor’s residence, be noticed to the debtor and to the chapter 13 trustee prior to being allowed.
S. 2136. This bill, entitled the “Helping Families Save Their Homes in Bankruptcy Act of 2007,” was introduced by Sen. Richard Durbin (D-Ill.), the Senate Majority Whip, on Oct. 3, 2007. It allows certain modifications of a debtor’s residential mortgage; allows a chapter 13 plan to provide for an extension of mortgage payments beyond the actual term of the mortgage; provides for the disallowance of a mortgage claim for violations of law; creates a $75,000.00 federal bankruptcy homestead exemption for debtors over the age of 55; and waives the pre-petition credit counseling requirement if the debtor is facing foreclosure. This bill also permits the court to refuse the enforcement of contractual arbitration agreements.
S. 2133. This bill, entitled the “Homeowners’ Mortgage and Equity Savings Act of 2007,” was introduced by Sen. Arlen Specter (R-Penn.) on Oct. 3, 2007. While this bill provides relief to debtors who are facing mortgage foreclosures, it is not as expansive as Sen. Durbin’s S. 2136.
H.R. 3778. This bill, also entitled the “Homeowners’ Mortgage and Equity Savings Act,” was introduced by Rep. Steve Chabot (R-Ohio) on Oct. 9, 2007. This bill is practically identical to Sen. Specter’s S. 2133.
H.R. 3648. This bill, entitled the “Mortgage Forgiveness Debt Relief Act of 2007” was introduced by Rep. Charles B. Rangel (D – N.Y.) on Sept. 25, 2007. It amends the Internal Revenue Code of 1986 to exclude from gross income for taxation purposes an indebtedness applicable to a debtor’s residence that was discharged in bankruptcy.
by: Prof. Mark S. Scarberry
Pepperdine University School of Law; Malibu, Calif.
ABI Robert M. Zinman Resident Scholar; Alexandria, Va.
Representative Miller (D–N.C.) introduced H.R. 3915 on Oct. 22, 2007 on his own behalf and on behalf of Representatives Watt (D–N.C.) and Frank (D–Mass.). The bill would enact the Mortgage Reform and Anti-Predatory Lending Act of 2007 (MRAPLA). MRAPLA includes three titles, each of which deals with residential mortgages. The provisions of MRAPLA are complex, and not all of them can be addressed in this short summary. This introduction notes some of the more important provisions of Titles I, II and III. Particular provisions of Titles I and II are considered further in the next two sections of this summary.
Title I of MRAPLA would add definitions to §103 of the Truth in Lending Act (15 U.S.C. §1602) (TILA) and insert a new §129A in TILA. Section 129A would regulate “mortgage originators,” requiring that they be licensed and registered. It also would impose on them a detailed “duty of care” and prohibit them from “steering any consumer to a residential mortgage loan that is not in the consumer’s interest.” Finally, it would give borrowers a cause of action for damages against mortgage originators who violated the provisions of §129A or regulations prescribed under it.