This is the so-called “cramdown” amendment which would allow bankruptcy judges to modify mortgage terms for struggling homeowners. Per C-SPAN, the modification option would be made available to those mortgage loans under $729,000.
It would also require borrowers to contact loan servicers 45 days before filing for bankruptcy. That would be done in an effort to work out a new agreement without going to a judge.
Bloomberg notes that defeat of this amendment was expected after “major U.S. banks broke off talks on a compromise.” That led several moderate Democrats to oppose it.
Senate Richard Durbin of Illinois, sponsor of so-called cram-down legislation, said today “months and months of heroic efforts” with banks and credit unions succeeded in winning one industry supporter: New York-based Citigroup Inc.
“I can’t tell you how many banks have walked away,” Durbin, the Senate’s second-ranking Democrat, said as debate began on the measure, which would amend a housing bill.
No Republican members voted for the amendment. The Democrat no votes include Senators Max Baucus (D-MT), Michael Bennet (D-CO), Robert Byrd (D-WV), Tom Carper (D-DE), Byron Dorgan (D-ND), Tim Johnson (D-SD), Mary Landrieu (D-LA), Blanche Lincoln (D-AR), Ben Nelson (D-NE), Mark Pryor (D-AR), Arlen Specter (D-PA) & John Tester (D-MT).
Per an agreement reached yesterday, no other “cramdown” related amendments can be offered on this bill.