Let me say for the record that I’m an Independent and for the most part you won’t see me get political on this blog, but…

WASHINGTON – Senate Republicans blocked a test vote on a housing bill yesterday that would have allowed bankruptcy judges to alter terms of certain mortgages in foreclosure.

Senate Democrats fell more than 10 votes shy of the 60 needed to proceed with consideration of the bill. On Wednesday, the White House threatened to veto the measure if it passed.

The banking industry, led by groups like the Financial Services Roundtable and the Mortgage Bankers Association, had lobbied aggressively against the bill. “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 G. Kittle, chairman-elect of the Mortgage Bankers Association.

Democrats have countered that the measure could help thousands of people keep their homes and avoid foreclosure. They blamed the banking industry for originating high-cost loans that borrowers were struggling to afford.

I heard Hillary Clinton make reference to a bail out plan in the TX and chide Obama for not supporting the measure. Government intervention at that level would be a major mistake in my humble but accurate opinion. Arbitrarily or even systematically applying reduced mortgage rates to troubled borrowers will deepen the housing crisis not relieve it. Sure there would be a number of individuals who would keep their homes who otherwise would not but at what cost? The already tighter lending standards and narrower appraisals would turn into a suffocating squeeze on the real estate market.

How can institutions be expected to lend if the contracts they’re writing (and selling) are subject to judicial whim? The consequences of a move like the Democrats are trying to make in this instance would be dire. The country is going to have to go through some pain. A lot of people are going to lose their homes, a lot of money is going to be lost. We have to suffer through this to essentially hit the reset button. Excessive meddling on the part of the government will extend these conditions and ultimately damage real estate even further.