National Law Journal - "Debating judges' role in foreclosure remedy"

Will judges soon have input in the solving of the economic crisis? Some hope so. As previously discussed in these pages, moves are under way to allow Bankruptcy Court judges to "cram-down" first mortgages.

Legislation to do just that has stalled in the House and the Senate for the past two years because of opposition by Republicans and the lending industry. Has the foreclosure landscape — by 2012, one in every nine homeowners will have lost homes to foreclosure, according to a Credit Suisse Securities analysis — changed sufficiently to break the back of this determined opposition?

Says Ellen Harnick, senior policy counsel at the Center for Responsible Lending,

"I am encouraged." "I think there is a strong sense across the board that this is needed, but industry opposition has really been the issue. It's surprising because the current situation might have made you think opposition either would have gone away quietly or failed to matter significantly."

But David Kittle, chairman of the board of the Mortgage Bankers Association, said

"cramdown" (reducing the creditor's secured claim to the current value of the property) makes no sense in any shape or form.

"We've defeated it twice," he said. "We acknowledge the environment and landscape have changed, but there is nothing good about filing for bankruptcy. Our Congress should not be in the business of encouraging people to go into bankruptcy."

There are arguments on both sides of the cram-down issue. To read the full article go here.

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