The U.S. Senate has rejected a proposal for mortgage cramdowns near to the hearts of many consumer groups that would have allowed bankruptcy judges to arbitrarily rewrite mortgages.
The idea, a key part of the Obama Administration’s foreclosure-fighting efforts, was always an uphill struggle against powerful bank lobbies which opposed it. Only Citibank came on board for the idea. Consumer groups called it a powerful tool that would have let judges lower the amounts owed to today’s values – enabling people to keep making payments and stay in their homes.
