Why Hasn’t Obama Supported Judicial Modification?

From the Bankruptcy Law Network:

Modification of home loans in bankruptcy was promised by candidate Obama before his election as President.  Current bankruptcy law prohibits modification of a loan secured against the debtor’s principal residence.  The idea was simple, if bankruptcy judges were allowed to adjust the balance due and payment terms of home loans in Chapter 13 cases, many homeowners facing foreclosure would be able to keep their homes.  The loan terms would become more affordable and the default leading to foreclosure would be eliminated. …

The current home finance system is a cash cow for large investment banks.  These giant financial institutions rely on sale of securities backed by home mortgages for much of their outrageous profit.  Big banks and their highly compensated executives have used their vast wealth to lobby against change.  If foreclosures stopped or were greatly reduced, there would be fewer new mortgages to package and sell.  In turn, there would be fewer multi-million dollar bonuses paid.