Despite Numerous Compromises, the Cramdown Bill Isn't Moving

Here's the latest on Federal legislation that would remove the exception in the bankruptcy code that prevents judges from treating home mortgages on a borrower's principal residence like other secured debts- for a limited time, on only those mortgages that were originated before 2009, and only for loans under a certain dollar amount (to list a few of the limitations that have already been agreed upon by the bill's sponsors). There is no principaled argument against this legislation: it's not going to increase the cost of real estate in the future, lenders aren't going to get any less from the borrower than they would otherwise, and there are already incentives and allowances in the administration's housing plan to facilitate voluntary modifications so that people can avoid bankruptcy. What is the deal?

Don't Forget About the Renters

The NY Times has this article today about renters in foreclosure. When a rental property is sold in foreclosure, tenants are often evicted (subject to certain timelines and notice requirements that might be imposed by state law). This article describes Fannie Mae's policy of continuing to rent to paying tenants until the property is sold. This makes sense, because it provides a stream of revenue for the bank and it also keeps the property occupied. Why don't other banks do this when they aren't required to by state law?