© Bloomberg News 2009

The U.S. House of Representatives rejected a mortgage “cram-down” amendment that would have given federal judges the power to lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court.

Lawmakers voted 241-188 today to strip the amendment from a broader package of proposed laws to rein in excess on Wall Street. All but four of the Republicans who voted opposed the amendment, pulling with them support from 71 Democrats to defeat the measure.

The cram-down provision was identical to legislation that passed the House in March and then failed in the Senate amid opposition from the banking industry. Banks and broker-dealers told House leaders in a Dec. 8 letter that the legislation would increase bankruptcy filings, lead to abuses of the court system and undermine efforts to stabilize the housing market. Read more.