House Democrats are now expected to take up their foreclosure-aid bill tomorrow,
after negotiators reached a deal to modify the “cramdown” provision that would allow bankruptcy judges to modify the mortgage terms on primary residences.
A summary of the changes can be viewed on the second page of this document, sent out by three California Dems who led the effort to change the bill: Zoe Lofgren, Ellen Tauscher, and Dennis Cardoza.
As I said yesterday, whether these changes constitute an unacceptable watering-down of the cramdown plan depends on one’s ideological and personal perspectives. One of the alterations — allowing lenders to “claw back” a greater portion of the profits if a home is sold during bankruptcy proceedings — would do little more than benefit banks.
But the other changes being made — particularly requiring lenders to offer a workable loan modification before a homeowner enters bankruptcy and ensuring that any modification offer is consistent with a homeowner’s income — can hardly be classified as giveaways.
Rep. Brad Miller (D-NC), one of the leading proponents of the cramdown plan, told the AP that the banking lobby is “giving it everything they’ve got” but that he backs the new changes:
It would encourage lenders to make modifications and there would be consequences if they don’t do it,
