Loose Ends of 105th Congress

The fate of several bankruptcy measures rests with the outcome of a conference on the consumer reform bills (H.R. 3150/S. 1301):

• Chapter 12 is set to expire on October 1 unless Congress extends it or repeals the sunset provisions. Given the serious financial problems looming in the farm sector, this could pose a problem if an extension is not incorporated into H.R. 3150/S. 1301.
• The due process rules for panel and standing trustees have been passed by the House (H.R. 2592), but the only vehicle for enactment this Congress is the consumer bill.
• Legislation to add 18 new bankruptcy judges (H.R. 1596) passed the House in July 1997. The judgeships are included in S. 1301 (§322) but with a reporting requirement on travel expenses that is opposed by the AOUSC. The new judgeships are not likely to pass without the travel provisions.

The booming $12 billion high LTV home mortgage market was the subject of recent studies by both the Office of Thrift Supervision and General Accounting Office. The studies found these "hybrid" loans present greater risk to private, non-regulated lenders than other types of consumer lending, but that the exposure of federally-regulated depository institutions is small at this time. One non-depository institution, First Plus of Dallas, has about one-third of the market.

GAO has also issued a report on the practice of lenders sending unsolicited "live loan checks" to borrowers. The report found that these are generally issued to the most creditworthy customers. The programs have been popular, with manageable risks, according to the GAO. One lender, First Chicago, abandoned the program after suffering losses during a pilot program.