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House OKs bill to let judges rewrite mortgages

The House has passed legislation to give debt-strapped homeowners a chance to win lower mortgage payments through bankruptcy courts.
/ Source: The Associated Press

The House has passed legislation to give debt-strapped homeowners a chance to win lower mortgage payments through bankruptcy courts.

The vote was 234-191 to approve the measure. It faces a tough road in the Senate, where Republicans and some Democrats oppose the idea.

The bill gives bankruptcy judges new power to reduce the interest rate and principal on a home mortgage. It's part of President Obama's housing rescue plan.

Supporters see it as a crucial tool to prod banks to negotiate with homeowners for more affordable terms. Critics say it will create a flood of bankruptcy filings that will drive up mortgage rates and further destabilize the battered housing market.