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Daily Real Estate News  |  January 6, 2010  |   Rep. Frank Argues for Cramdown Legislation
U.S. Rep. Barney Frank, chair of the House Financial Services Committee told CNBC Tuesday that making loan modifications mandatory for banks is nearly impossible to do fairly.

“What do you then say to the individual who says, ‘Wait a minute, we’re equally circumstanced. I’ve got the same mortgage she’s got. I’ve been more prudent. I’m not in distress; she is. Why does she get the reduction?’” he said.

Instead, he called for passage of bankruptcy-overhaul legislation that would allow judges to modify mortgages. This so-called “cramdown” legislation passed the House last year, but didn’t get enough votes in the Senate.

Frank says passage would encourage principal reductions while forcing the borrowers in that circumstance to pay the price of bankruptcy.

Source: The Wall Street Journal, Nick Timiraos (01/05/2010)

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