Bankruptcy

Cram Down Amendments Defeated in Senate

By mcbride

 A new law, which would amend the Bankruptcy Code to allow the reduction, with court approval only, of a home mortgage to the amount of the home?s value, was defeated in the US Senate yesterday.  The result of the law would have been to allow many homeowners to remain in their homes while making payments on a debt which equated with today?s value of their home rather than the amount of the debt against the home.  The number of foreclosures would have diminished as a result and there would have been some payments which continued to be made to lenders ? although in a reduced amount, rather than a return of the empty home to the lender.  ?The Democratic-controlled Senate on Thursday defeated a plan to spare hundreds of thousands of homeowners from foreclosure through bankruptcy, a proposal that President Barack Obama embraced but did little to see through.

A dozen Democrats joined Republicans in the 45-51 vote to scuttle the measure, which Obama had said was important to saving the economy and promised to push through Congress. But facing stiff opposition from banks, Obama did little to pressure lawmakers who worried that it would encourage bankruptcy filings and spike interest rates.?

Here is a link to that article: http://www.star-telegram.com/238/story/1351349.html

And here is a link to another article also on this topic: http://www.bloomberg.com/apps/news?pid=20601103&sid=aJ_sqd73P0Wk&refer=us

Michael

Full post as published by Texas Lawyer Blog on May 04, 2009 (boomark / email).