Financial Industry-Supported Changes In Consumer Bankruptcy Rules Now Hurting Mortgage Lenders

BusinessWeek reports:

• The latest lesson for lenders from the housing crisis: Be careful what you wish for. Banks and other financial outfits spent eight years and $40 million lobbying for sweeping new bankruptcy rules that would limit their losses from deadbeat debtors. But it turns out those changes, enacted in 2005, are forcing more troubled borrowers to walk away from their homes—even those who didn't take on risky mortgages in the first place. And that's bad news for lenders, which suffer financially every time they have to take a troubled property on their books.

For more, see Tougher Bankruptcy Laws Bite the Lenders (How tough new laws on resolving personal debts are burning lenders—not just cash-strapped Americans).