Summary: Washington Revives the Mortgage Cramdown

According to the article, "Washington Revives the Mortgage Cramdown", new ideas on how to stop the current mortgage crisis are being passed around Congress. Included in these ideas are bills that would force the lenders to pause before they foreclose and offer borrowers a break on their mortgage if they qualify for help under the Treasury program. Another idea being introduced to the Senate includes the temporary suspension of home-loan payments or brief monthly mortgage subsidies for unemployed homeowners. However, almost all Democrats believe they have the best option: cramdown. Cramdown would allow bankruptcy courts to adjust mortgages. Under this idea, a judge would have the power to reduce principle or interest rates on loans and stretch out mortgage payments. Supporters of the bill believe cramdown would free homeowners of the debt they cannot pay, at the same time pushing lenders to make deals before reaching the courthouse. On the other hand, critics believe cramdown would drive up borrowing costs and make loans much harder to obtain.