U.S. House Rejects Cramdown Measure
Sacramento Bankruptcy Lawyer Discusses the U.S. Houses’s recent vote rejecting mortgage cramdown measure
On December 11, 2009, the U.S. House of Representatives voted to reject a measure that would have allowed bankruptcy judges to change the terms of mortgages for distraught homeowners who were unable to keep up with their mortgage payments. The measure was defeated in a 188-241 decision. The controversial measure was introduced by Representative John Conyers (D-Michigan), chairman of the House Judiciary Committee. It would have allowed bankruptcy courts to reduce mortgage interest rates, adjust principal balances or extend the length of mortgages in an effort to save homeowners from foreclosures. Under the measure, homeowners would be required to seek a loan modification, upon which bankruptcy judges would determine whether the borrower was offered a qualified plan that would prevent them from changing the terms of the mortgage in the bankruptcy process.
Previously the House had approved a similar mortgage cramdown measure in March over the objections of Republicans and bank lobbyists. However, the measure was later defeated in the Senate. Of course, as with any controversial measure, both sides are hotly debated. Proponents of the measure claim cramdowns would help to stop the increasing number of foreclosures across the United States. Meanwhile, opponents of the measure state that doing so would raise costs for everyone and only serve to divert debt.
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