House approves Mortgage Cramdown bill
Update: This bill was defeated in the Senate.
Great news! The House approved today the cramdown bill in a 234 - 191 vote.
You don’t have to wait to file for bankruptcy to enjoy the fruits of this bill —from now on, you can negotiate your loan modification with your mortgage servicer with a dramatically improved leverage, which will reach its full potential when it’s passed into law. It shouldn’t be long, both the House and Senate bills were initiated simultaneously.
So, call your senator to ask him to make bill S61 a law: (202) 224 - 3121.
After The Senate approves the “mortgage cramdown” bill, bankruptcy judges will have the discretion to lower mortgage payments to save borrowers from losing their homes. On March 4, in related news, the government launched the Homeowner Stability and Affordability Plan, which also requires lenders who take these funds to comply with these same bankruptcy guidelines.
“Cramdown” is the simple term for allowing bankruptcy courts to modify mortgage terms in Chapter 13 filings. See HR 1106 for the full House version. S 61 is the companion version in the Senate. Respective sponsors are John Conyers and Dick Durbin. It basically means that the court can order lenders to accept less in interest and/or principal relative to the amount owed by a debtor on a primary mortgage that is part of a bankruptcy filing.