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Old 05-01-2009, 09:57 AM
moh malekpour moh malekpour is offline
Join Date: May 2002
Location: Southern California
State: California
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The U.S. Senate rejected legislation letting U.S. bankruptcy judges cut mortgage terms to help borrowers avoid foreclosure, a victory for banks and credit unions that said the measure would lead to higher loan costs.

The “cram-down” provision, amending a housing bill, won 45 votes today, with 12 Democrats among 51 opponents. The measure needed 60 votes to pass. The House passed its version 234-191 on March 5.

“These bankers who brought us into this crisis are literally shunning and stiff-arming the people who are facing foreclosure,” said Senator Richard Durbin of Illinois, sponsor of the legislation and the Senate’s second-ranking Democrat.

The defeat is a setback for the Obama administration, which included cram-down in the anti-foreclosure plan aiming to help 9 million homeowners. The mortgage industry has twice succeeded in helping to kill the bankruptcy proposal since Durbin introduced the legislation in 2007. The second-ranking Democrat said “this is not the last time” he will raise the issue.

Democrats control Congress, but the Senate remains fairly moderate.

Mortgage cram-downs could be one of several steps to avoid another period of lending insanity. They would also keep some people in their homes.

However, I would pass it without making it retroactive — it should only impact loans made going forward. Otherwise, it would create too much chaos among investors. There is already plenty of confusion about the true value of mortgage securities made during the boom.
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Old 05-01-2009, 10:03 AM
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Denver Denver is offline
Join Date: Feb 2007
State: Florida
Professional Status: Certified Residential Appraiser
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Is this the legislation that proposes using BPOs and AVMs for valuations instead of appraisals?
Old 05-01-2009, 11:05 AM
Randolph Kinney Randolph Kinney is offline
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Location: SoCal
State: California
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It appears the bankers are still in control of the legislative system. A cram down is not to any lender or investor's interest but against it.

Much like the indemnification of servicers who are changing the terms and conditions as they make loan modifications, no investor will tolerate that.

Chrysler is going to discover that no investors will ever invest in its debt or equity going forward. It will become a permanent ward of the government and any needed capital will come from the taxpayers.
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