Frank: Modify Loans Or Risk Reintroduction Of Cramdown Legislation

tgage servicers do not increase their efforts to modify loans, expect to see a return of bankruptcy cramdown legislation. That was the message delivered by House Financial Services Committee Chair Barney Frank, D-Mass., in a [link=http://www.house.gov/apps/list/press/financialsvcs_dem/pressfore_072909.shtml][u]press statement[/u][/link] Wednesday. Saying Congress has provided ‘every legislative tool recommended’ by the mortgage industry, Frank noted the legislative branch's disappointment with the preliminary results of Making Home Affordable. "[P]eople in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different," Frank said. His statement came a day after senior officials with the Obama administration met with the CEOs from 25 servicers participating in the federal foreclosure prevention plan. Servicer-specific performance data is expected to be published Aug. 4. Frank is not the only lawmaker who has resuscitated the cramdown discussion in recent weeks. Last Thursday, the Senate Judiciary Committee held a [link=http://www.mortgageorb.com/e107_plugins/content/content.php?content.3967][u]hearing[/u][/link] to reexamine whether cramdown legislation needs to be reintroduced. The Senate voted down such legislation sponsored by Sen. Dick Durbin, D-Ill., in May. "I can assure all concerned that no legislation which we are asked to pass to facilitate the full return of the lending industry to the role it should be playing in the economy will pass out of the Financial Services Committee unless we see a significant increase in mortgage modifications and foreclosure voidance or the legislation includes a bankruptcy provision for primary residences," Frank warned in his statement. SOURCE: [link=http://financialservices.house.gov/]House Financial Services Committee

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