The Senate is currently debating a bill aimed at helping stem the foreclosure crisis. By far the most controversial provision was an amendment that would have allowed bankruptcy judges to modify a mortgage, including reducing the amount owed which is know as a "cramdown."
The major banks, including those that are currently using government money and protection as a means of avoiding bankruptcy themselves, opposed the cramdown provision.
I'm no bankruptcy judge, but I believe current law allows for a cramdown of a mortgage on an investment property, a second home, and on commercial properties. So it is only a mortgage on a primary residence, you know the one that people really need to avoid being put into the street, that does not allow for a reduction in principal.
A sensible provision that may provide for an actual reduction in foreclosures during these unusually bad economic times may be just what we need; sadly it may also be just what our government is unable to deliver.
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For more details on the cramdown, visit Senatus or OpenCongress
1 comment:
This is what happens when so much special interest money thrown is towards congressmen from the banking industry. Why, the banking industries tentacles are so long they even managed to coax President Obama and Sec. Geithner into not supporting cramdown provisions only tepidly. The lobbies chicken little-esque stories of higher interest rates scared the congress and the president just enough, nevermind whether the rates would actually rise or not.
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