‘Cram Down’ Legislation Proposed

October 21, 2009

A Cram Down is a proposed provision in a regulatory reform bill that would allow bankruptcy judges to modify mortgages on primary homes by forcing lenders to reduce (or cram down) mortgage balances.

Obviously, most lender organizations are against such a provision. Here’s what David Kittle, chairman of the Mortgage Bankers Association, had to say about it: "Allowing judges to retroactively modify borrowers’ mortgage balances will destabilize a mortgage market that desperately needs stability right now. Treasury officials report that the administration’s Home Affordable Modification Program (HAMP) is on target to reach its stated goal of 500,000 trial loan modifications by November 1. We ought to let that program continue to take hold, rather than rushing to try to pass a measure that will do more harm than good. Loan modifications cannot happen overnight. But as the Treasury report shows, servicers are making significant progress," Kittle noted.

Posted in Real Estate