U.S. Senate Votes Against Mortgage Modification Cramdown

April 30, 2009 by senatus Senators have defeated an amendment offered by Senator Dick Durbin (D-IL) to the Helping Families Save Their Homes Act (S. 896) by a vote of 45 to 51. It was subject to a 60-vote threshold. This is the so-called “cramdown” amendment which would allow bankruptcy judges to modify mortgage terms for struggling homeowners. Per C-SPAN, the modification option would be made available to those mortgage loans under $729,000. It would also require borrowers to contact loan servicers 45 days before filing for bankruptcy. That would be done in an effort to work out a new agreement without going to a judge. Bloomberg notes that defeat of this amendment was expected after “major U.S. banks broke off talks on a compromise.” That led several moderate Democrats to oppose it. Senate Richard Durbin of Illinois, sponsor of so-called cram-down legislation, said today “months and months of heroic efforts” with banks and credit unions succeeded in winning one industry supporter: New York-based Citigroup Inc. “I can’t tell you how many banks have walked away,” Durbin, the Senate’s second-ranking Democrat, said as debate began on the measure, which would amend a housing bill. Click here for more story

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