Senate to Take Another Look at Cramdown

Monday, July 20, 2009 at 12:52 pm

Nearly three months after the Senate killed a House-passed proposal allowing homeowners to stave off foreclosure through bankruptcy, some upper-chamber Democrats are wondering if it isn’t time to revisit the issue.

Leaders of the Senate Judiciary Committee, not satisfied that mortgage lenders and servicers have done enough to prevent foreclosure voluntarily, have scheduled a cramdown hearing for Thursday. They have good reason. Even as the nation’s largest banks are posting record second-quarter profits, the number of foreclosures continues to rise, topping 1.5 million for the year, according to RealtyTrac, including 336,000 in the month of June alone.

The Obama administration, which once supported cramdown — a proposal to allow bankruptcy judges to modify the terms of mortgages — says it doesn’t need the additional leverage to tackle the housing crisis. But if the numbers continue to rise through the year — which they could very well do as unemployment figures go up — then the pressure on Congress to take additional steps will also increase.

Sen. Richard Durbin (D-Ill.), sponsor of the Senate cramdown bill, has vowed to bring it back up at the first ready opportunity. There won’t be many of those in a year when the legislative calendar is already squeezed with big-ticket items like health care reform and climate change legislation. Then again, the housing crisis was at the root of this downturn. If there’s a bigger-ticket item than stabilizing this economy, we don’t know what it is.



Comment posted July 24, 2009 @ 10:01 am

How will it cost us in the long run. My bank will not even work with me, they told me just let it go into foreclosure they will collect from my mortgage insurance. The banks are selling the homes for half the price already. I think we need new US Senators. The old ones have been bought by the banks. They are not looking into what is happening with the foreclosures. I am in California i have lost $479,000 in the purchase price of my house. My bank wont even answer the phone, I get someone’s voicemail. The cram down needs to go through soon or we need to get new Senators. I really do mean that!

Administration Belatedly Pushing Banks To Slow Foreclosures | ICT magazine
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