posted
Sep 17, 2009 by admin
With foreclosure filings topping 300,000 for the sixth straight month, Senate Democrats are considering a return to a contentious battle they lost in the spring to Wall Street.
In April, banks beat out an effort to give bankruptcy judges “cramdown” authority — the power to renegotiate home mortgages under bankruptcy protection. Democrats fell 15 votes short of the 60 they needed to overcome a Republican filibuster.
But Majority Whip Dick Durbin (D-Ill.), who led that effort, now ways he’s ready to give it another shot. “I support returning to this issue of foreclosure,” he said, avoiding the term cramdown, which he considers a banking industry term even though it is also the word used by judges to describe the practice. “I can tell you that the banks have not stepped up and volunteered to make this situation any better.”
Last week, Financial Services Committee Chairman Barney Frank (D-Mass.) and Judiciary Committee chief John Conyers (D-Mich.) said they wanted to revisit the issue. Frank said he planned to make it part of the overall financial regulatory reform package that the White House sees as must-pass.
But the measure easily passed in the House last time. In the Senate, the wound is still fresh.
“I don’t know. We tried that once,” said Dodd, asked whether he’d make cramdown part of the overall package. “I supported the cramdown. What did we get?”
White House “ambivalence,” Dodd said in the spring, was partly to blame for the Democrats’ inability to muster the needed votes.
“I still believe that the idea of allowing for principal reduction rather than just interest rate reduction makes a lot of sense, so that people can see an opportunity to earn equity in their homes then they’re more likely to stay,” said Dodd.
If a homeowner sees little to no possibility of positive equity, the rational decision could be to mail the keys to the bank, walk away, and find a cheaper rental property.
As foreclosures continue unabated, said Dodd, Congress will need to act. “I’m still very anxious to see us come up with some additional, more aggressive ideas with the foreclosure rates,” he said. “It’s still a major problem for us.”
Jim Manley, a senior communications advisor for Majority Leader Harry Reid, issued the following statement Tuesday: “Sen. Durbin believes and Sen. Reid agrees that bankruptcy cramdown is another tool that could help keep struggling home owners in their homes. It’s unclear if it ultimately will be part of reg reform given how the Senate has voted on this issue in the recent past.”
Read more: Foreclosures, Debt, Mortgages, Real Estate, Foreclosure Filings, Dick Durbin, Politics News
