Under the provision, a judge would be able to lower the principal of homeowner’s mortgage and the interest rate and extend the terms of the mortgage, a process known as a “cramdown.” Judges are already allowed to do this for vacation rentals but not a borrower’s primary residence.
- 12 Democrats (listed here) voted against allowing bankruptcy judges to compel banks to renegotiate mortgage terms so as to prevent homeowners from being foreclosed on and thrown out of their homes.
- Bankruptcy judges currently have this "cramdown" power to renegotiate mortgage terms on vacation homes and investment properties.
- Vacation homes and investment properties are disproportionately owned by very rich people.
QUESTION 1: Out of the hundreds of professional "journalists" who work in Washington, can someone - anyone - please ask these 12 Democratic senators why they believe it is perfectly fine for bankruptcy judges to cram down mortgages for very rich people's vacation homes and investment properties, but not mortgages for regular people's homes? IMHO, this is the most important question, especially because none of these 12 Democratic senators are sponsoring legislation to repeal the law that gives judges cram down power to help rich people.
The House passed the badly needed Credit Card Holders Bill of Rights yesterday, but they passed cramdown, too. We successfully fought off the efforts of the Mortgage Bankers Association, the American Bankers Association and other lobbyists to work through Ellen Tauscher and the New Democrats to tank it, but that just means the banks shifted their focus to the Senate, where they were wholly successful. And they plan to do the same thing for the Credit Card Holders Bill of Rights.MORE
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