Industry NewsMortgage

‘Cramdowns’ on tap in 2009?

Report: Dems to renew push for loan mods in bankruptcy

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Democrats are planning to reintroduce legislation that would allow bankruptcy judges to modify the terms of troubled borrowers' loans -- a move that industry opponents say will lead to higher interest rates and down payments for all borrowers.Rep. Brad Miller, D-N.C., said he plans to introduce a bill today allowing bankruptcy "cramdowns" of mortgage loan principal, the Wall Street Journal reported. Sen. Richard Durbin, D-Ill., plans to sponsor similar legislation in the Senate, the paper said.Miller said it's clear that voluntary efforts by lenders to modify the loans of troubled borrowers are "just not working" to prevent foreclosures.Mortgage Bankers Association chief lobbyist Francis Creighton told the Wall Street Journal that its members have modified 2.8 million loans. The MBA has opposed cramdowns because the group says they could lead to higher losses for lenders and undermine the confidence of investors who buy mortgage-backed securities that fund most loan...