Summary - Washington Revives the Mortgage Cramdown

Theo Francis's article Washington Revives the Mortgage Cramdown discusses the notion that cramdowns (from the idea of cramming deals down lenders' throats) would be a good way for citizens to adjust their unpayable mortgages before bankruptcy proceedings reaches the courthouse. Democratic Senator Richard J. Durbin (IL) is leading the charge in favor of these cramdowns. If Durbin's bill were to pass in the Senate (it narrowly failed in the spring), it would allow a judge to reduce principal or interest rates on home loans and lengthen the time to pay back mortgage payments. Another possible result of this bill will be for homeowners to have their unaffordable debts wiped free. Lobbyists on behalf of the financial industry in Washington D.C. are preparing for battle because the vote was extremely close last time around. While cramdowns may be good for homeowners in foreclosure, the banks are certainly hoping to try and avoid this.