The bill is entitled the "Helping Families Save Their Home Act" and is commonly referred to as the "cramdown" bill in the House. The bill passed by a margin of 234-191. Prior to passage, the bill was modified to be more "lender friendly". The bill now requires that distressed borrowers certify that they provided their financial information to their lenders and that the lender was given time to offer them alternative options to bankruptcy.
With the passage of this legislation, distressed borrowers who receive a "cramdown" are required to reimburse their lending organization a portion of the loss that would be incurred of they sell their home prior to the completion of the five-year bankruptcy repayment plan agreement.
Opposing the legislation, House Republican Leader John Boehner of Ohio believes that it victimizes those troubled homeowners who have acted in a responsible manner. He feels that scam artists, speculators, and bad decision-makers would be subsidized.
Also included in the bill; FDIC's insurance on bank deposits will increase to two-hundred fifty thousand dollars. This change will give lenders additional legal protection throughout the modification of distressed loans. It also gives new life to the Hope for Homeowners lending program, which to date has not been successful.
A version of the bill is expected to be presented to the senate early next week.
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