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Bill Radke: As I mentioned, the White House today kicks off a new program
meant to help up to 9 million borrowers keep their homes. The plan allows homeowners to refinance mortgages or modify loans to lower monthly payments. The Treasury has released guidelines to let lenders know how to enroll borrowers. Borrowers can find out whether they’re eligible by logging onto a Web site. There’s a link to that site at Marketplace.org.

Another part of the program gives bankruptcy judges the ability to modify mortgages. Democrats reached an agreement last night to narrow that reach. Marketplace’s Dan Grech reports.

Dan Grech: It’s being called the cramdown bill. That’s because it crams a mortgage banks don’t want down their throats.

Right now, when a person can’t pay the mortgage on their primary residence, banks hold all the cards. They can cut you a break on the loan, or they can foreclose on you. The bill in Congress would empower bankruptcy judges to step in. The judge could force the lender to cut the principal on a loan, lower the interest rate, or even extend the life of the loan.

Real estate expert Ilyce Glink publishes ThinkGlink.com:

Ilyce Glink: Nobody wants to go into bankruptcy court. This is a last-ditch place. But if it gets to this point, I think that judges need this mechanism to process these cases and get them through.

Banks have lobbied hard against the bill, and Congress has made some concessions. Homeowners must prove they tried unsuccessfully to work things out with the bank. And banks get a piece of the profits if the house is ever sold. The House could vote on the bill as early as tomorrow.

I’m Dan Grech for Marketplace.