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Senate nixes mortgage ‘cram downs’

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Bankruptcy judges won't get the power to rewrite the terms of mortgages on primary residences anytime soon, after a dozen Democrats joined Republicans in the Senate on Thursday and voted against tacking bankruptcy "cram down" legislation onto another housing bill. In a 45-51 vote, the Senate rejected an amendment to S 896, the Helping Families Save Their Homes Act. Introduced by Sen. Dick Durbin, D-Ill., the amendment would have allowed cram downs on mortgages when homeowners were already in foreclosure and lenders had not offered a loan modification. In a 234-191 vote March 5, the House of Representatives signed off on cram-down language in passing the House version of the bill, HR 1106 (see story). Cram-down supporters say they want to force lenders to step up efforts to help homeowners avoid foreclosure. Bankruptcy judges already have cram-down powers over mortgages on second homes and investment properties. But opponents in the lending industry continued to ...