REALTOR® Magazine-Daily News-Senate Defeats Mortgage Cramdown Bill
Senate Defeats Mortgage Cramdown Bill
The proposed law allowing bankruptcy judges to modify mortgages, known as the cramdown bill, was voted down Thursday by the U.S. Senate.
The financial industry opposed the bill, arguing that the change would drive up interest rates and make the market less stable. Some senators also were concerned that their constituents who pay their bills on time would resent this measure.
Minority Leader Mitch McConnell, who led the opposition, says the vote "ensures that homeowners who pay their bills and follow the rules won't see an interest-rate hike at the whim of a bankruptcy judge."
The reform was a key part of President Obama’s foreclosure prevention plan, leaving some to question ultimate likelihood of its success.
"It won't render the loan modification program useless, but it removed an important ingredient that would have helped realign everybody's interests," says Barry Zigas, director of housing policy for the Consumer Federation of America.