No cramming down bankruptcy cram downs

The Senate voted this evening NOT to bring the Foreclosure Prevention Act of 2008 to the floor for a vote. This is the bill that includes provisions to allow bankruptcy judges to modify the mortgages of troubled borrowers to help them avoid foreclosure (see previous post).

The 48-46 party line vote was a procedural matter, and we could see the bill come back in another form (it has a lot of other stuff in it, like giving state housing finance authorities the go ahead to issue $10 billion in additional mortgage revenue bonds to refinance subprime loans, that's not controversial).

But no way are Democrats who support cram downs going to get 67 votes to override a presidential veto. If the idea ever sees the light of day, it will be because a President Obama or McCain can live with it.

The Mortgage Bankers Association sent out a bulletin to members hailing the vote as a "major victory."

"Over the last several weeks, MBA has used all tools available to influence today's successful outcome - including the activation of MBA's grassroots network, the Mortgage Action Alliance," the bulletin said. "Our thanks to all MBA members who called or wrote their Senators and expressed in no uncertain terms the industry's opposition."

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