Although the real fight over this is going to take place in the Senate, supporters of mortgage "cram downs"--who include President Barack Obama--got a boost Thursday when a bill allowing judges to alter the terms of mortgages on primary residences during bankruptcy passed the House of Representatives by a vote of 234-191.
From The Associated Press:
It took days of intense bargaining with an assist from Obama's team to get the measure back on track. The president dispatched his housing secretary, Shaun Donovan, to a closed-door meeting in the Capitol to explain to restive Democrats how the measure fits in with the $75 billion housing initiative Obama unveiled this week.
The resulting compromise would bar homeowners from getting loan modifications in bankruptcy court unless they have first tried to work out a deal with their lenders and have no other way of affording their mortgages.
It also would let judges consider whether the home loan company had made a reasonable offer to change the terms to those embodied in Obama's housing plan — allowing the homeowner to reduce his monthly payments to about one-third of his income.
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