Senate rejects housing proposal

WASHINGTON, April 30 (UPI) -- The U.S. Senate Thursday rejected a White House-backed housing bill to help struggling homebuyers reduce their mortgage payments.

The legislation, widely opposed by the financial services industry, would have allowed homeowners to petition bankruptcy court judges to write down the principal and interest payments for their primary home mortgages.

Democrats fell 15 votes shy of the 60 votes necessary to pass the bill, the Hill reported. Twelve Democrats, including Sen. Arlen Specter of Pennsylvania, who left the Republican Party this week, voted against the plan.

Senate Majority Whip Dick Durbin, D-Ill., has tried to pass the bankruptcy measure through the Senate for two years. The plan cleared the House in March.

"I don't know what the next step will be," said Durbin before the Senate vote. "It'll surely be the conference committee and hopefully the House can keep some aspect of bankruptcy reform in this. If we fail ... we'll wait another year and face a worse crisis and hope that the banks won't have as much clout."

JPMorgan Chase & Co., Wells Fargo, Bank of America and The Credit Union National Association had discussed a compromise with Durbin, The Hill said.