Democrats in the U.S. House of Representatives disagree on legislation to let bankruptcy judges reduce the principal and interest rate on mortgages for debt-strapped homeowners, the Associated Press reported February 26, 2009.
President Barack Obama supports the measure, the most controversial part of a broader housing package that had been expected to pass the House already.
The banking industry has lobbied hard against the measure, mounting a successful multimillion-dollar effort last year to kill the legislation.
Banks want to go much further. Banks want to restrict the bill to subprime or other exotic loans only.
The mortgage industry contends, however, that the measure will impose steep and unpredictable costs on its companies, which will be forced to raise fees and interest rates for borrowers.
Industry lobbyists welcome the delay, which will give them time to press for a more narrow measure.
Should bankruptcy judges have these broad powers?