House delays vote on mortgage write-downs

The House delayed voting until next week on a controversial housing bill that empowers bankruptcy judges to write down mortgages, said sources familiar with the plans.

The bill was scheduled for a vote on the House floor on Thursday, but a final vote has been delayed, sources said.

{mosads}Some centrist Democrats and New Democrats were pushing this week to limit the impact of the legislation. The bill is part of broader housing legislation sponsored by House Judiciary Committee Chairman John Conyers Jr. (D-Mich.) and House Financial Services Committee Chairman Barney Frank (D-Mass.).

The financial-services industry has vigorously opposed “cramdown” legislation that would let bankruptcy judges write down the principal and interest payments on mortgages for primary residences. The industry says the bill, as written, is too broad and would allow homeowners to head to court before attempting to work out a modified mortgage with their lender. More liberal Democrats have supported the legislation as a way to ensure there is a strong “stick” to force lenders to modify mortgages.

President Obama has supported “cramdown” legislation generally, but appeared to signal that he wanted courts to be a last resort.

Speaker Nancy Pelosi (D-Calif.) said that Housing and Urban Development Secretary Shaun Donovan will address Democrats Monday night to explain how cram-downs and other aspects of the mortgage bill fit into a larger Democratic effort to deal with the mortgage and foreclosure crisis.

“We want to put it in it’s full context, that’s all,” Pelosi said Thursday.

This article was updated at 1:04 p.m.

Mike Soraghan contributed to this article.