In a compromise intended to appease lenders, the House of Representatives today passed legislation that will allow bankruptcy judges to rewrite the terms of troubled borrowers' mortgages -- but only if they have first tried to work with their loan servicer to obtain a loan modification or other alternative to foreclosure. The Obama administration considers so-called bankruptcy cram-downs a useful tool for encouraging lenders to participate in an initiative aimed at helping up to 9 million families restructure or refinance their mortgages (see story). The House version of a bill that would amend the bankruptcy code, HR 1106, the Helping Families Save Their Homes Act of 2009, passed in a 234-191 vote. Most of the opposition came from Republican members, although seven members of the...
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