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Mortgage modification proposal fails in SenateThe proposal involved so-called 'cram-down' measures, which essentially permit judges in bankruptcy court to reduce the principal on a struggling borrower's mortgage. Proponents say the successful passage of the bill would encourage lenders to voluntarily modify home loans before a borrower considers bankruptcy. However, the financial industry opposes the changes, claiming they would damage their financial stability and lead to higher interest rates for all borrowers. According to the Wall Street Journal, although the Senate did not approve the mortgage legislation, it may still be resurrected if the foreclosure crisis worsens. A similar cramdown measure has already been approved by the House of Representatives. Senator Dick Durbin of Illinois, who authored the bill, expressed his disappointment after the proposal's failure, reportedly saying that he would not support further financial pleas from the banking industry. "I want to tell you that if they have no sympathy for the 8 million families that are facing foreclosure in this country, then I don't have any sympathy for them," he said, according to the Wall Street Journal. The news comes after the most recent figures from RealtyTrac show that March saw the highest number of foreclosure filings the company has seen since it began issuing its report in January 2005. Total filings for the month reflected a 24 percent increase on data from the same period in 2008.
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