Reporters cover proposals for allowing bankruptcy judges to alter mortgage terms as part of their job. That means that they are paid to know roughly how much impact this change could have on lenders and therefore the future costs of mortgages. On the other hand, readers don't typically have time to determine the cost themselves. This is why the Washington Post was incredibly negligent to just tell readers that, "most lenders oppose the measure [bankruptcy reform], saying it would raise the cost of making home loans because of the possibility lenders could lose control over the loans in a bankruptcy." Readers have no way to assess whether there is any merit to this assertion, a full-time reporter at a major national newspaper does. For those who care, if 1 percent of mortgages end up in bankruptcy (a very high percentage) and the judges actions as a result of this measure result in banks getting an average of ten percent less than would otherwise be the case 9a very large cut), then this would raise their costs by 0.1 percentage point. This amount would presumably be passed on to borrowers in mortgage interest rates that would average 0.1 percentage point higher. This increase would be smaller if the change only applied to existing mortgages (and not future mortgages) as is currently being proposed by Congress.
--Dean Baker