This was a vote on an amendment that would have allowed a lender on a mortgage that had been reduced in a bankruptcy proceeding to recover the amount of the reduction if the home were later sold at a profit. The amendment was offered by Rep Price (R-GA) to a bill which was designed to prevent mortgage foreclosures and increase the availability of mortgage credit. That bill included language which, for the first time, would allow bankruptcy judges to reduce the principal amount of a home mortgage of a debtor.
Rep. Price, in support of his amendment, first made the overall argument that had been put forward by the Republicans against the entire bill - - that it punishes home buyers “who have lived within their means and acted prudently by forcing them to subsidize those (home buyers) who made irresponsible choices.” He also said that the bill had only limited features to prevent home owners that had declared bankruptcy from later profiting from the sale of a house they were irresponsible in originally buying, and said that that “no one should be able to profit off of a bankruptcy proceeding.” Rep. Goodlatte (R-VA) supported the amendment because, he claimed, it will serve as a disincentive for many homeowners to “game the bankruptcy system . . . and make sure that we don't have a run on the bankruptcy courts . . . ..”
Rep. Lofgren (D-CA), speaking against the amendment, first argued that the bill already had language that would limit a homeowner whose mortgage was reduced from selling the property and “a responsible provision for lenders who have had their mortgages adjusted in (bankruptcy) to recover on a graduated basis, should property values appreciate at sale.” Lofgren said she opposed the Price Amendment because its effect would be to “gut the bill, damage communities and damage home values.” Lofgren also argued that the amendment, by more severely limiting the ability of a homeowner who declared bankruptcy from later selling the house at a profit “would have the effect of making it practically impossible for a family to move to pursue another job. Families would not only keep their homes, they would be trapped there.”
The amendment failed by a vote of 211-218. One hundred and seventy-four Republicans and thirty-seven Democrats voted “aye”. All 218 “nay” votes were cast by Democrats. As a result, language allowing lenders to recover the amount mortgages were reduced in bankruptcy was not added to the bill designed to prevent mortgage foreclosures.