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No Mortgage Cramdown Bill for Christmas

It would have been in the spirit of Christmas to pass the Mortgage Cramdown amendment.  But apparently Congress is a bigger fan of The Grinch.

After the “Mortgage Cramdown” legislation was re-introduced by Barney Frank (D-MA), the House of Representatives rejected it by a vote of 188-241. Just in time for the holidays.

Mortgage cramdown would have given bankruptcy judges the ability to change the terms of a mortgage for the benefit of homeowners who had filed for bankruptcy.  Opponents like to argue that violates the “sanctity of contract law” to break contracts in this way.

Of course, they ignore that fact that bankruptcy law typically involves breaking lots of contracts and that there’s nothing particularly special about a mortgage contract versus other contracts.  Additionally, cram down is allowed in–and frequently used–in chapter 11 cases, especially corporate bankruptcies.  Cram down is also acceptable to use for vacation and investment property, just not for your primary residence.  All of which makes it even more unfair to prohibit mortgage cram down by a bankruptcy judge in a Chapter 13 bankruptcy case.

Additionally, while loan modifications are a solution that works for some, they certainly don’t work for most and merely make a dent in a very large problem for our society.

All of that said, the mortgage cramdown legislation is not to be for now, and the foreclosure crisis will persist to the detriment of New York homeowners, Americans and the U.S. economy.

If you’re dealing with mortgage problems, facing foreclosure or wondering if you should file for bankruptcy in New York, please feel free to contact me for a free initial consultation to discuss all of your New York foreclosure and bankruptcy options and figure out the best strategy to get you moving forward again.

Contact Bruce Weiner, Esq.

EMAIL Bruce Weiner
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
Fax (718) 625-1966

Go to to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

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