A follow up to last weeks post: HR 3609 - 5 Things You Need To Know About The Senate's Mortgage Fix

Senate Republicans blocked consideration of HR 3609. The bill is designed to help the struggling housing industry but contains provisions that are perceived to hurt lenders and further provoke the current mortgage mess. The provision known by opponents as the "Cram Down", that would allow bankruptcy judges to adjust the terms of distressed homeowners mortgage, has been at the center of the debate.

Democrats argue that unlike the Stimulus Package this would help distressed homeowners now instead of waiting for the stimulus plan to "kick in" and that the bankruptcy risk premium that lenders would be forced to impose on all mortgage borrowers would be minimal. Republicans argue that bankruptcy provisions do not have anything to due with the current housing problem.

Proponents of the legislation have vowed to keep fighting for the bill which could go to vote again next week.

Even if the bill had passed President Bush vowed to veto it. However, the administration may get on board if current market trends hold as they agree that something has to be done. What that something is may not be clear but several plans are being considers including:

1) Allocating government funds to revive the mortgage-backed securities market.

2) Funding for local governments to purchase vacant foreclosed homes to renovate for resale or rent.

3) Boosting the ceiling on federal bonds housing agencies may issue to help subsidize the cost of mortgages for first-time home buyers and properties in distressed areas.

Where do you stand?

Are these three provisions coupled with the Stimulus Plan/ changes in FHA policies and Project Lifeline enough?

Do you think ideas such as Professor John Vogal's "Last Chance Pool" will work?

Do you think more government intervention is necessary or is up to the individual borrowers and lenders to fix their own problems?