7 Mar 2009

US House backs mortgage bankruptcy law change

8:16 am on 7 March 2009

The US House of Representatives has approved a bill to let bankruptcy court judges reduce the primary residence mortgage debt of bankrupt homeowners as a last resort to avoid foreclosure.

The so-called "cramdown" bill is seen by Democratic supporters as vital to stabilizing the crumbling US real estate market.

Bankers opposed the legislation despite amendments to limit its scope, including one restricting it to existing mortgages.

The Senate was expected to consider its own version of the House bill soon, but chances of passage are uncertain.