House Dems may resurrect 'cramdown' bill

House Democrats may bring up a highly controversial bill that failed to pass Congress earlier this year that would empower bankruptcy judges to rewrite mortgage terms.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said on Wednesday that if the financial industry does not make strides in reducing the number of foreclosures, he would consider pushing for the bankruptcy bill.

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The bill, called "cramdown" by opponents in the financial industry, fell 15 votes shy of passing the Senate earlier this year, with Democratic leaders blaming the banking lobby. The bill was one of the most heavily lobbied financial issues this year.

The industry met with Obama administration officials on Tuesday to discuss ways to improve efforts to reduce the foreclosure rate that continues to dog the housing market. They aim to produce 500,000 loan modifications by November.

"People in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different," Frank said in a statement.

Frank argued that lawmakers have "provided every legislative tool" for the industry to help ease the foreclosure problem.

The Obama administration's housing plan aims to help modify or refinance up to 9 million mortgages.