{"id":2105,"date":"2009-05-01T17:41:08","date_gmt":"2009-05-01T21:41:08","guid":{"rendered":"http:\/\/www.jasetaro.com\/blog\/?p=2105"},"modified":"2009-05-01T18:05:16","modified_gmt":"2009-05-01T22:05:16","slug":"mortgage-cramdown-bill-dies-in-senate","status":"publish","type":"post","link":"https:\/\/www.jasetaro.com\/blog\/2009\/05\/01\/mortgage-cramdown-bill-dies-in-senate\/","title":{"rendered":"Mortgage Cramdown Bill Dies in Senate"},"content":{"rendered":"

Barack Obama’s economic policy suffered a setback yesterday when a bill that would have allowed bankruptcy judges to force lenders to adjust the principal on mortgages failed<\/a> in the Senate. The bill received 45 votes, 6 short of the 51 needed for passage… A dozen Democrats joined Republicans in opposing it:<\/p>\n

For the second time in two years, a provision to allow bankruptcy judges to modify mortgages died in the Senate today, handing the Obama administration a significant defeat in its plans for arresting the foreclosure crisis.<\/p>\n

Supporters argued the measure would keep 1.7 million borrowers in their homes, but it ultimately foundered in the face of fierce financial industry and Republican opposition. The bankruptcy modification provision, which was offered an amendment to a broader housing bill, failed by a vote of 45 to 51.<\/p>\n

\u201cI\u2019ll be back. I\u2019m not going to quit on this,\u201d said Senate Majority Whip Richard J. Durbin (D-Ill.), who sponsored the measure. He noted that estimated foreclosures during the housing crisis has ballooned from 2 million to 8 million since his campaign for the change to the bankruptcy code began.<\/p>\n

< \u2026 ><\/p>\n

\u201cInstead of encouraging homeowners who are at risk of foreclosure to file for bankruptcy, the federal government should continue to encourage lenders to work with owners to modify loans where it is economically viable for homeowners to remain in their homes,\u201d Republican Whip Sen. Jon Kyl (R-Ariz.) said. \u201cWhile it is regrettable that not all homeowners are eligible for a loan modification, Congress should not incentivize bankruptcy by making it the only means to save one\u2019s home.\u201d<\/p><\/blockquote>\n

Sen. Kyl is right on the mark… If bankruptcy judges can arbitrarily reset principal values, then there’s no incentive for people to honor the contract they willingly signed.<\/p>\n

The Democrats who joined Republicans in opposing this ill conceived bill are:<\/p>\n