Members of the House Financial Services and Judiciary committees have fashioned a narrowly tailored bill to allow bankruptcy judges to modify "predatory" mortgages, but congressional "experts" think it has virtually no chance of passing.Rep. Brad Miller, D-N.C., told a Mortgage Bankers Association conference that the bankruptcy bill (H.R. 3609) is drafted to help troubled subprime borrowers with adjustable-rate 2/28 loans. It would allow bankruptcy judges to waive prepayment penalties and spread the principal payments over 30 years. The interest rate could be set a "couple of points" above that of the prime mortgage to recognize that the borrower is riskier than a prime borrower. The congressman noted that Sen. Arlen Specter, R-Pa., might support a similar bill on the Senate side, as opposed to a broader bill that Sen. Richard Durbin, D-Ill., is drafting to repeal other parts of the 2005 bankruptcy bill, which took 10 years to pass. MBA senior vice president Steve O'Connor told the mortgage bankers that bankruptcy experts think the chances of congressional passage of H.R. 3609 are "close to zero."

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