One less option for borrowers in trouble.

Bankruptcy judges won't get the power to rewrite the terms of mortgages on primary residences anytime soon.  Democrats joined Republicans in the Senate yesterday and voted against tacking bankruptcy "cram down" legislation onto another housing bill.

The Senate rejected an amendment to the Helping Families Save Their Homes Act.
The amendment would have allowed cram downs on mortgages when homeowners were already in foreclosure and lenders had not offered a loan modification.

Cram-down supporters say they want to force lenders to step up efforts to help homeowners avoid foreclosure. Bankruptcy judges already have cram-down powers over mortgages on second homes and investment properties.

But opponents in the lending industry continued to lobby against an expansion of cram-down powers. They said, judicial modifications of mortgages on primary residences would raise the cost of borrowing by introducing new risks for lenders and investors who fund lending through purchases of investments backed by mortgages.

While loan servicers are on track to engage in 3 million "workouts" with borrowers this year, foreclosure starts hit an annualized rate of 3.5 million in March, according to numbers released by the HOPE NOW loan servicers.

It difficult to know what will and what will not work.

On the bright side experts are saying the housing bottom is in sight, you can see the light at the end of the tunnel. Signers of the bottom include, the volume of foreclosure being purchased reducing excess inventory and the strong market upswing.

As always, comments and questions are encouraged. Please contact us at marcia@minocquamortgage.com or go to www.minocuqamortgage.com for more information. I look forward to hearing from you.