H.R. 3609. This bill, entitled the “Emergency Home Ownership and Mortgage Equity Protection Act of 2007,” was introduced by Rep. Brad Miller (D-N.C.) and Rep. Linda Sanchez (D-Calif.) on Sept. 20, 2007. A hearing was conducted on this bill before the House Judiciary Subcommittee on Commercial and Administrative Law on Sept. 25, 2007, and the bill was “marked up” on Oct. 2, 2007. It contains provisions that would permit the modification of a claim secured exclusively by a debtor’s residential real property; it would eliminate the requirement of credit counseling for debtors facing foreclosure; and it would require that post-petition fees and charges in a chapter 13 bankruptcy case, relative to a claim secured by a debtor’s residence, be noticed to the debtor and to the chapter 13 trustee prior to being allowed.
S. 2136. This bill, entitled the “Helping Families Save Their Homes in Bankruptcy Act of 2007,” was introduced by Sen. Richard Durbin (D-Ill.), the Senate Majority Whip, on Oct. 3, 2007. It allows certain modifications of a debtor’s residential mortgage; allows a chapter 13 plan to provide for an extension of mortgage payments beyond the actual term of the mortgage; provides for the disallowance of a mortgage claim for violations of law; creates a $75,000.00 federal bankruptcy homestead exemption for debtors over the age of 55; and waives the pre-petition credit counseling requirement if the debtor is facing foreclosure. This bill also permits the court to refuse the enforcement of contractual arbitration agreements.
S. 2133. This bill, entitled the “Homeowners’ Mortgage and Equity Savings Act of 2007,” was introduced by Sen. Arlen Specter (R-Penn.) on Oct. 3, 2007. While this bill provides relief to debtors who are facing mortgage foreclosures, it is not as expansive as Sen. Durbin’s S. 2136.
H.R. 3778. This bill, also entitled the “Homeowners’ Mortgage and Equity Savings Act,” was introduced by Rep. Steve Chabot (R-Ohio) on Oct. 9, 2007. This bill is practically identical to Sen. Specter’s S. 2133.
H.R. 3648. This bill, entitled the “Mortgage Forgiveness Debt Relief Act of 2007” was introduced by Rep. Charles B. Rangel (D – N.Y.) on Sept. 25, 2007. It amends the Internal Revenue Code of 1986 to exclude from gross income for taxation purposes an indebtedness applicable to a debtor’s residence that was discharged in bankruptcy.
Exceptions to Discharge in Bankruptcy for Certain Qualified Educational Loans, S. 1561
Sen. Durbin introduced legislation (S. 1561) that will allow private student loans to be discharged in bankruptcy. Under changes made to the Bankruptcy Code in 2005, private student loans were given the same preferred treatment as government-guaranteed student loans. Currently, both government-guaranteed loans and private student loans are non-dischargeable except under very extreme circumstances.
“Private student loans are incredible money-makers for loan companies, and students end up saddled with sky-high interest rates and mountains of debt,” said Durbin. “I don’t think many 17 or 18-year old students realize the long-term impact of their loan decisions. Some of these private student loan repayment schedules—with double-digit interest rates—can follow a student borrower from graduation to the grave.”
Private student loans are the fastest growing and most profitable sector of the student loan industry. Since 2001 the market for private student loans has grown at an annual rate of 27 percent to $17.3 billion in 2006—roughly 20 percent of total student borrowing. Ten years ago, only 5 percent of the total education loan volume was in private loans. The interest rates and fees on private loans can be extremely burdensome. Unlike federally issued or guaranteed student loans, there is no government-imposed amount limit on private loans and no regulation over the terms or cost of these loans. Prior to the enactment of BAPCPA, only government issued or guaranteed student loans were nondischargeable in bankruptcy. This protection had been in place since 1978 and was intended to safeguard federal investments in higher education. The Durbin bill restores to the bankruptcy law the language that was in place before 2005, so that privately-issued student loans will once again be dischargeable in bankruptcy.
Executive Compensation Reform, H.R. 1257
Just days after an oversight hearing on executive compensation in chapter 11, the House passed H.R. 1257, the Shareholder Vote on Executive Compensation Act, by a vote of 269-134.
The bill would amend the Securities and Exchange Commission’s executive pay disclosure rules to require public companies to allow their investors the opportunity to participate in a nonbinding and advisory vote on the company’s executive pay plans.
Introduced by Rep. Barney Frank, (D-Mass.), the House version would take effect in January 2009. The bill states: “The shareholder vote shall not be binding on the corporation or the board of directors and shall not be construed as overruling a decision by such board, nor to create or imply any additional fiduciary duty by such board….”
Protecting Employees and Retirees in Business Bankruptcies, H.R. 3652
A bill entitled the “Protecting Employees and Retirees in Business Bankruptcies Act of 2007” was introduced by House Judiciary Committee Chairman Rep. John Conyers (D-Mich.), Rep. Linda Sanchez (D-Calif.), Rep. Jerrold Nadler (D-N.Y.), Rep. Steve Cohen (D-Tenn.) and Rep. Betty Sutton (D-Ohio). A companion bill was introduced in the Senate by Richard Durbin and Sen. Edward Kennedy (D-Mass.). Included in the bill’s provisions are the following:
A. A worker’s wage claim would be doubled to a maximum value of $20,000.00.
B. A priority claim would be created for the loss in value of a worker’s pension.
C. A priority administrative expense would be established for a worker’s severance pay.
D. Sections 1113 and 1114 of the Bankruptcy Code would be amended to tighten the criteria by which collective bargaining agreements and retiree benefits could be altered.
E. The requirement that employees earn their wage and benefit claims within 180 days of the bankruptcy filing would be eliminated.
F. Deferred executive compensation would be prohibited if an employee compensation plan was terminated during the administration of the bankruptcy case.
G. Executive compensation enhancements such as bonuses would be limited during the administration of the bankruptcy case.