OpinionIndustry News

Judges should have say in mortgage modifications

Perspective: Bankers' big win is borrowers' major loss

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The Mortgage Bankers Association recently fought off federal legislation that would have allowed bankruptcy judges to modify residential mortgages. The MBA's victory was a huge success for lenders, but an unfortunate loss for homeowners who have declared bankruptcy. Lenders had good reason to dislike the proposal, which would have shifted some of the power over mortgages from lenders' loss-mitigation departments to bankruptcy judges, who might have imposed modifications that the lenders wouldn't have liked. The risk was deemed so serious that the MBA pulled out all the stops to pound the idea into dust. Lawmakers were lobbied, members were mobilized, press releases were issued, and the MBA's Web site featured a "Stop The Bankruptcy Cram Down Resource Center" chockfull of inflammatory verbiage, out-of-context snippets and specious arguments. Consider "cram down," a bit of MBA-speak that refers to a judicial cut in the interest rate on a borrower's exist...