Bankruptcy Changes

A friend of mine has an interesting idea to deal with the potential flaws in the proposals to change bankruptcy rules for homeowners- allow the rule change (which would let bankruptcy judges restructure mortgages to give struggling homeowners more time to pay off their loans, with lower monthly payments), but apply it only to non-standard, subprime mortgages.

In effect, my friend's idea would create a safe harbor for lenders where the new bankruptcy provisions wouldn't apply, as long as those lenders act responsibly by requiring a 10% down payment, a 15 or 30 year fixed mortgage, insurance, etc.

This would probably do a lot to limit the costs of the rule changes on potential future borrowers by allowing lenders to limit their risk (and thus offer lower interest rates) to folks willing to go for a standard mortgage.