The Mortgage Bankers Association (MBA) issued a statement this week applauding the U.S. Senate’s rejection of The Foreclosure Prevention Act of 2008—a bill that, if passed, would allow judges to modify the existing terms on mortgage loans.
The act has been drawing significant criticism for its violation of contractual obligations and free-market principles.

“Bankruptcy is not the answer for borrowers who are having a difficult time making their mortgage payments, and it is gratifying to see enough Senators recognize this fact,” said David Kittle, chairman-elect of the MBA. “While there were some provisions of the bill that we would like to see enacted into law, like additional resources for housing counselors and increased help for borrowers trying to refinance out of troubled loans, the overwhelming negative effect of the bankruptcy provision outweighed those positive measures.”
The bill was blocked from hitting the voting block by Republican Senators. In response to the Senate’s rejection, the MBA said while it’s pleased with the decision, the organization remains committed to other initiatives that it believes will prove helpful to distressed borrowers.
“There is plenty that can be done to help stabilize the mortgage market, like modernizing the FHA and many of the provisions in today’s bill, on top of the ongoing industry efforts under the HOPE NOW alliance,” said Kittle. “We look forward to working with Senators to allow state housing agencies to use mortgage revenue bonds to help borrowers refinance troubled loans, as well as on FHA modernization and GSE oversight reform.”