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Cramdown amendment to HR 4173 opposed by CUNA
WASHINGTON (12/9/09)--The Credit Union National Association (CUNA) has urged Rules Committee Chairwoman Rep. Louise Slaughter (D-N.Y.) not to allow an amendment to H.R. 4173 that would grant bankruptcy judges power to modify--or "cramdown"--terms of existing mortgages. H.R. 4173 is the comprehensive financial institutions regulatory reform package, the Wall Street Reform and Consumer Protection Act. The House begins discussion of the massive bill today and it has been reported that more than 250 amendments have been filed to the legislation. Rep. John Conyers (D-Mich.) on Tuesday submitted the amendment to H.R. 4173 that would modify the bankruptcy code to permit judicial mortgage modification in Chapter 13 bankruptcy proceedings. The House is scheduled to begin votes on regulatory reform measures today. In a Tuesday letter to Slaughter, CUNA President/CEO Dan Mica noted that cramdown legislation, which was “controversial and bitterly divisive” when it was introduced earlier this year, could force credit unions to strongly oppose the broader regulatory restructuring measure. According to Mica, “the specter of a well underwritten loan to a deserving borrower being adjusted through a judicial process is simply abhorrent to most credit union executives and volunteers.” CUNA said credit unions are sympathetic to the financial needs of their members and “work each day to extend credit on terms which are in the best interest of the borrowing member and the membership at large.” CUNA also said it recognizes the need for Congress to take steps to help keep people in their homes. However, Mica said that CUNA with a cramdown amendment, CUNA oppose the legislation as it “has the potential to do long-term damage to the mortgage market and undermine the safety and soundness of credit unions.” “We have tried in good faith to work with proponents of this proposal on a compromise that would address the foreclosure crisis ignited by the sub-prime lending crisis and perpetuated by the unemployment crisis, without jeopardizing the safety and soundness of credit unions or having other adverse consequences to the mortgage lending market,” Mica wrote. “Unfortunately, that compromise remains elusive.”

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