Homeowner Affordability and Stability Plan and Bankruptcy Cram-Down Legislation

February 26, 2009
President Obama’s recently announced Homeowner Affordability and Stability Plan aims to expand low rate refinancing eligibility for homeowners with mortgages held or guaranteed by Fannie Mae or Freddie Mac, create new incentives for lenders to cooperate with borrowers in modifying the terms of loans that are at risk of default and/or foreclosure, maintain mortgage rates at low levels to encourage the issuance of new mortgages, and implement a wide range of reforms to avoid foreclosures and homeowner displacement. In this update, we examine key elements of the Plan as well as certain bills introduced in the U.S. House of Representatives that permit bankruptcy cram-downs.