Industry News

Senate won’t hear bankruptcy cramdown bill

Democrats appear to be far short of veto override

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The Senate voted Thursday against holding a vote on a bill that included a proposal to allow bankruptcy judges to modify the mortgages of troubled borrowers to help them avoid foreclosure. That aspect of the bill was strongly opposed by the lending industry, which maintained that it would undermine investor confidence in secondary markets where mortgages are bought and sold, resulting in higher interest rates and larger down-payment requirements for borrowers. The White House issued a policy statement Tuesday threatening a veto of the bill, S 2636 -- a warning reiterated by President Bush at a press conference Thursday. Provisions of the bill would "do more to bail out lenders and speculators than to help American families keep their homes," Bush said, and prolong the time it will take for housing markets to recover. The Bush administration also opposes provisions of the bill that would provide $4 billion in state and local assistance for redeveloping abandoned and for...