Senate Committee Talks Cramdown…Again

Posted by Orb Staff on July 24, 2009 No Comments
Categories : Mortgage Servicing

nkruptcy cramdown debate, which fell silent following the Senate's defeat in May of legislation proposed by Sen. Dick Durbin, D-Ill., was resurrected in a Senate Judiciary Committee hearing Thursday. ‘If we fail to act, I fear that we put ourselves at risk – that a vicious cycle of foreclosures, falling home values and declining tax revenues will keep us in recession for years to come,’ said Sen. Sheldon Whitehouse, D-R.I., regarding the bankruptcy-reform measure that would allow bankruptcy judges to reduce principal. The hearing featured testimonies from a Rhode Island homeowner, an attorney with the National Consumer Law Center and a Georgetown University Law Center professor, among others. Ranking member Sen. Jeff Sessions, R-Ala., toed the Republican party line, noting that mortgages are contractual agreements and that borrowers have an obligation to abide by the terms of said agreements. "There's no free lunch here," he said. Georgetown professor Adam Levitin, however, contended that none of the current loan modification or refinancing programs attempt to "deal with the negative-equity problem in a way that offers a long-term solution." The May Senate vote on Durbin's legislation fell by a 45-51 count. SOURCE: Senate Judiciary Co

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