Compromise bill could expand FHA loan guarantee program

Democrats agree to drop bankruptcy 'cramdowns'

Plans for a massive expansion of FHA loan guarantee programs got a boost this week when Senate Republicans agreed to include the idea in a compromise bill if Democrats would drop a controversial proposal to allow bankruptcy courts to "cram down" the mortgage debt of troubled borrowers.

Tuesday’s agreement between Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., could lead to a congressional debate over a $300 billion to $400 billion expansion of Federal Housing Administration loan guarantee programs