Bill To Modify Mortgages in Bankruptcy Fails

Washington, DC, May 1, 2009--Legislation that would have allowed bankruptcy judges to modify mortgages died in the Senate yesterday.

Supporters argued that the measure would have kept 1.7 million borrowers in their homes. It foundered in the face of fierce opposition from the financial industry and Republicans. The legislation, offered as an amendment to a broader housing bill, failed by a vote of 45 to 51.

The measure would have allowed bankruptcy judges to modify troubled mortgages, lowering the interest rate or principal balance through a process known as a cramdown.