Senate Defeats Mortgage Cram Down’

Posted April 30, 2009 at 2:36pm

Centrist Senate Democrats joined with Republicans on Thursday to defeat a measure intended to help struggling homeowners stay in their homes.

By a 45-51 vote, Senators voted against an amendment that would have allowed bankruptcy judges to write down the terms of existing primary home mortgages. The proposal was offered to a bill that would increase the borrowing authority of the Federal Deposit Insurance Corp.

“[It] sounds real good, but I don’t think anyone in the mortgage industry can determine what they have if a judge comes and changes things,— said Sen. Ben Nelson (D-Neb.), who voted against the measure.

Supported by President Barack Obama, Senate Majority Whip Dick Durbin (D-Ill.) spent more than a year negotiating with banks and their lobbying arms in Washington, D.C., on a compromise that they could accept.

On Thursday, Durbin said nearly all parties had walked away from the negotiating table, and he reiterated that he would oppose future government bailouts of the banking industry.

“I am sick and tired of being asked to give billions of dollars to these banks when they won’t in any way help the people who are facing mortgage foreclosure,— Durbin said. “If they have no sympathy for 8 million families that are facing foreclosure in this country, then I don’t have any sympathy for them.—

Though Durbin said he believed the issue might be dead for the year, he did hold out hope that the provision might be salvaged by a House-Senate conference committee on the bill. “I know that Democrats in the House feel very intensely about this,— he said.

However, Durbin’s inability to pull even a bare majority for the amendment dampens prospects that the conference report could survive on the Senate floor if the language were included.

A similar measure was defeated last year, receiving 36 votes, all from Members of the Democratic caucus.