What is the Bankruptcy “cramdown” bill?
This is a bill that many homeowners were hoping would pass. While BK judges are already permitted to “lien strip” second mortgages that are not secured by any equity in a homeowners property (i.e. they get rid of your second mortgage), the cramdown law would have given the Bankruptcy judges the power to strip principal off the first mortgage as well with very little the lenders could have done about it. This would have been great because it probably would have compelled more lenders to seek meaningful loan modifications, rather than just modifications on their terms. The law failed to pass, but there is talk about a revised bill resurfacing.
