Federal Credit Unions Refuse To Endorse Cramdown Bill

tional Association of Federal Credit Unions' (NAFCU) board of directors says it cannot ‘support and defend’ the bankruptcy cramdown legislation proposed by Sen. Richard Durbin, D-Ill. Durbin and his staff have been in negotiations with financial trade groups to try to garner industry support for a Senate version of the Helping Families Save Their Homes Act of 2009, which passed in the House. The NAFCU wants a more targeted version of cramdown law. The organization backed a bankruptcy reform proposal last year that limited court-mandated loan modifications to subprime and Alt-A products. The board of directors has "asked questions about the administration's modification and workout plans for subordinate liens, as well as how this legislation and new bankruptcy authority would impact existing private mortgage insurance contracts," NAFCU President and CEO Fred R. Becker Jr. wrote in a letter to Durbin. Such details are not available, Becker adds, writing, "Without this information, the NAFCU Board of Directors does not believe that they can fully and fairly evaluate how this legislation will impact credit unions." The NAFCU says it would support a broader bankruptcy package that provides a carve-out for loans made by not-for-profit lenders (e.g., credit unions, housing associations) that "did not contribute to this current crisis." SOURCE


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