Is judicial modification of mortgages still on the table?

Last year, the U.S. House of Representative passed a measure that would allow bankruptcy judges to reduce the principle amount on mortgage loans for homes that were "underwater" - e.g., the house is worth less than what is owed. Unfortunately, the measure was defeated in the Senate so it never became law. Well, this article from the Huffington Post indicates that a similar measure is still being considered by lawmakers. The measure under consideration would have the same effect as the measure that failed last year but would be modified slightly. It would still allow qualified homeowner's to "cramdown" their mortgages in bankruptcy so that the principle mortgage is equal to the value of the house. Similar provisions exist in bankruptcy for car loans, but not for home loans. The new "cramdown" measure is being considered as an addition to the financial reform bill being debated in Congress.

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