House Committee Passes Proposed Mortgage ‘Cram-Down’ Bankruptcy Measure

The House Judiciary Committee on Wednesday passed a controversial ‘cram-down’ bankruptcy reform measure that would enable judges to modify a borrower’s mortgage in a Chapter 13 bankruptcy. HW reported Tuesday that a modified version of the Emergency Homeownership and Mortgage Equity Protection Act of 2007 had been agreed upon in principle.

The bill passed despite nearly non-existent support among Republicans — the final vote of 17 to 15 was arrived with only one Republican supporting it. It will now head to the House of Representatives for consideration.

From the Associated Press:

House leaders appeared unlikely to bring the bill up for a vote before year-end. But the effort could accelerate next year as Congress faces increasing pressure to react to mounting foreclosures and defaults. Similar legislation is pending in the Senate …

“We are in the midst of a crisis — and one that is deepening,” said Rep. Steve Chabot, R-Ohio, the lone Republican to support the bill, adding that he was “worried about keeping the residents of my district and in the state of Ohio in their own homes.”

As readers may know, I’ve written commentary outlining why I think this bill is a very bad idea.