Our friends over at HousingWire report that the controversial cram down legislation may be in trouble in US Senate.
Senators were set to vote this week on the bill, which would allow bankruptcy judges to modify mortgages and lower the principal owed by a homeowner. The bill has run into opposition from the financial industry and lacks support in the Senate.
The bill’s principal sponsor, Sen. Richard Durbin (D-IL), continued discussions with large banks like Bank of America and JP Morgan Chase without any apparent compromise from either side, sources told American Banker.
The bankruptcy modification section, as it stands, would require borrowers to fall two months behind in payments on an outstanding balance of less than $729,750 in order to qualify, Senate aides told the Washington Post. The bill would also require borrowers to split any profits from the sale of the home with the lender while in bankruptcy proceedings.
“I hope we can muster the courage and find the votes, although I know it will be hard,” said Durbin on the Senate floor Monday, according to the Washington Post. “It’s hard to imagine that today the mortgage bankers would have clout in this chamber, but they do.”
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