Cramdowns Are A Bitter Pill
New York-Top officials from the Mortgage Bankers Association appear ready to compromise on the issue of "cramdowns" if Congress proceeds with legislation that allows bankruptcy judges alter the terms of a mortgage.
It's a tough pill to swallow for the MBA. Last year, the MBA made blocking cramdowns its top public policy priority. This year, in the wake of a spreading foreclosure crisis, top officials from the MBA acknowledged in a conference call that supporters of cramdowns have gained the upper hand. The MBA leaders outlined parameters they would like to see govern the extent to which bankruptcy judges could "cram down" a loan.
Legislation should limit the discretion judges have to reduce principal, lower rates or extend terms, MBA chairman David Kittle said. He said cramdowns should only be allowed after a "waterfall" of other loss-mitigation options has been exhausted.