Judges Will Not Get Right To Cut Mortgage Bills

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Judges Will Not Get Right To Cut Mortgage Bills

Post  Clive DeVuture on Fri May 01, 2009 5:09 am

Judges Will Not Get Right To Cut Mortgage Bills
Posted 04/30/2009 07:22 PM ET


The Senate on Thursday scuttled legislation that would have let hundreds of thousands of debt-ridden homeowners seek mortgage relief in bankruptcy court.

President Barack Obama had said the bill was important to saving the economy and promised to push for its passage. But facing stiff opposition from banks, Obama did little to lean on lawmakers who worried it might spike interest rates.

The bill would have let bankruptcy judges rewrite a person's mortgage terms, if a bank refused to offer better ones based on income and home value. Forty-five senators voted for the bill and 51 against it.

"The banks that are too big to fail are saying that 8 million Americans facing foreclosure are too little to count in this economy," said Senate Majority Whip **** Durbin.

Bid To Get Bankers Aboard

Durbin, D-Ill., led efforts in the Senate to pass the bill, but Obama's administration focused instead on less divisive legislation to limit fees by credit card firms and pushed job creation via a $787 billion stimulus plan.

The House passed the bankruptcy legislation in Marc h, 234-191. Banking groups negotiated for weeks with Senate Democrats. Officials said Durbin agreed to narrow its provisions to win support. But Democrats didn't get endorsement.

"Cramdown legislation would make things worse by adding even more risk to the mortgage market," a dozen financial groups, including the American Bankers Association, wrote to senators Wednesday.

Clive DeVuture

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