WASHINGTON, April 30 (Reuters) - The U.S. Senate on Thursday rejected an amendment that would have granted bankruptcy judges the power ease a homeowners’s monthly payments and save them from foreclosure.
Supporters of the ‘cramdown’ provision argued t would serve as a useful tool to help repair the housing market and keep millions of troubled borrowers in their homes.
Opponents to the plan have said its arbitrary rules would scare investors away from the housing market and so prolong the current slump.
Illinois Democrat Senator Richard Durbin has for weeks tried to reach a compromise with leading banks like Bank of America (BAC.N), JPMorgan Chase (JPM.N) and Wells Fargo & Co. (WFC.N), but those talks collapsed in recent days, said sources close to the discussions.
The changes to the bankruptcy rules were offered as an amendment to a broader bill that would increase the federal government’s support for the Federal Deposit Insurance Corp. and trim the red tape for another foreclosure-prevention program. (By Patrick Rucker; Editing by Neil Stempleman)