On May 20, 2009, President Obama signed the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act into law (Pub.
[3] In the wake of the bursting of the United States housing bubble and the collapse of the American subprime mortgage industry, this bill was introduced by Rep. John Conyers (D-Michigan) on February 23, 2009.
With Rep. José Serrano (D-New York) designated as chairman of the committee, the House debated the bill for one hour and then left it as unfinished business.
Proponents of cram down, chiefly Democrats, have cited studies saying that the provision could have helped 20% of homeowners facing foreclosures stay in their homes.
[8] This provision drew extensive criticism because it would have allowed borrowers to abdicate their contractual obligation to repay the full amount of their loan.
Many argued that cram down would have made it more costly for other individuals to purchase a home because lenders would have had to increase interest rates and down payments to supplement the loss from the loan modification.