Durbin's Cramdown AmendmentApril 30, 2009 - by Donny Shaw
Opponents to cramdown generally argue that allowing judges to modify mortgages for homeowners who enter bankruptcy would create ongoing uncertainty for mortgage lenders and would lead to higher interest rates for future borrowers. But Senator Durbin’s cramdown amendment (.pdf), which was defeated today by the Senate, contains language specifically designed to prevent that kind of problem.
Fist, in Section 503, entitled “Authority to Modify Certain Mortgages,” it specifies that only mortgages signed in the past – none in the future – would be eligible for modification during bankruptcy proceedings:
Second, the mortgages, which would have to satisfy a number of other qualifications first, would only be eligible for modification under bankruptcy until December 31, 2012:
See earlier: All Carrot, No Stick.