Housing and Urban Development Department Secretary Shaun Donovan is due to meet with House Democrats today to discuss how the Obama administration's foreclosure mitigation plan jells with legislation that would let bankruptcy judges cram down mortgage debt.

Mr. Donovan's input could influence continuing negotiations in the House on how to craft the bill. The House plans to take up the bill this week. Until now the administration has not been actively involved in the details of the legislation.

At a Senate Banking Committee hearing Thursday, Mr. Donovan reiterated that bankruptcy should be a last resort and suggested that lenders that offer loan modifications under the Obama modification plan should be protected from cramdowns.

"We do not want arbitrariness or the unpredictability of a bankruptcy judge modifying to a level that is well below the value of the home, because we do not think that that is fair as well," he said.

Mr. Donovan said the administration is interested in working on a resolution.

"What I am laying out are potential ideas for ways to target bankruptcy reform in a way that we think would be most effective," he said.

When President Obama laid out his housing plan on Feb. 18, he said mortgage bankruptcy reform should include existing loans originated in the "past few years" and exclude millionaires by capping eligible mortgages to those within the conforming loan limit.

The administration also said "homeowners must first ask their servicers/lenders for a modification and certify that they have complied with reasonable requests from the servicer to provide essential information."

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