Washington Revives the Mortgage Cramdown

In the article "Washington Revives the Mortgage Cramdown", Theo Francis discusses the possible solutions that the Democrats are proposing to the surging foreclosure problem in the United States. On many people's wish list, there is a hope for a renewed push to allow so-called cramdown, which would let bankruptcy judges adjust the terms of home loans to give borrowers relief. Cramdown is the idea of cramming deals down lenders' throats which the banking industry hates. One bill introduced by Senator Jack Reed would force lenders to pause before they foreclose and to offer borrowers a break on their mortgage bill if they qualify for help under the Treasury program. The bill would also give the e states $6.4 billion do to help homeowners stay put. Overall, the main goal is to help the people of the United States to fight for what they should still have despite how the economy is going. Many people could easily argue with this logic, except the mortgage companies. Other improvement ideas include: considering the temporary suspension of home-loan payments or brief monthly mortgage subsidies for unemployed homeowners and supporting the broader housing market by extending a homebuyer's tax credit. Many lawmakers are calling for support for cramdown. Supporters say cramdown would free homeowners from debt they can't afford while prodding lenders to cut deals before reaching the courthouse. Detractors argue cramdown would spook the mortgage market, thus driving up borrowing cost and making loans harder to get which would be a nightmare for lenders. While many lenders are still not jumping onto this new helpful bandwagon to his customers, Senator Richard J. Durbin is the crusader for homeowners who may face foreclosure. He is willing to attach a cramdown provision to any convenient bill if it won't get a hearing on its own. He states, "The proposal will always be part of the conversation, if for nothing else than to scare the daylights out of everyone." So mortgage companies and banks better watch their backs.