It looks like the controversial home mortgage bankruptcy bill will be delayed because of a severe snow storm that covered Washington D.C. today, forcing the U.S. House of Representatives to push back their bankruptcy votes to a later date.
The bankruptcy provision, known as a “mortgage cram-down,” would empower Federal Courts to write down the interest rates and principals of home mortgages for primary residences. President Obama has openly supported the change to bankruptcy laws to help struggling homeowners throughout his campaign in 2008.
The vote could come later in the week, however, after a previously scheduled meeting between House Democrats and Housing and Urban Development Secretary Shaun Donovan, aides said. That meeting, which had been set for Monday, was reset for Tuesday.
A snowfall of several inches caused delays across much of the Washington area. The snow made it tough for many lawmakers to get to the capital after a weekend back home, prompting a postponement of House votes that had been set for Monday.
This just after last week’s postponement.
The vote was postponed last Thursday after centrist Democrats, including New Democrats and Blue Dogs, said the provision was too broad. Minor tweaks have been made since then, but not to the satisfaction of the banking lobby, which wants the measure to apply only to risky mortgages and to ensure that courts are a last resort.
President Obama has broadly supported cramdown, but said that it should be a last resort to reduce the stress in the housing market and curb the number of home foreclosures.
A vote scheduled for Tuesday is likely to be delayed until Housing and Urban Development Secretary Shaun Donovan has the chance to brief the Democratic Caucus, where House liberals and left-leaning groups say “cramdown” is a necessary stick to force lenders to adjust mortgages. A previously scheduled briefing on Monday night was delayed.
However, it looks like the democrats are fighting amongst themselves as moderate democrats are voicing their opinions on the bill to House Speaker Nancy Pelosi.
In a private meeting last week, Speaker Nancy Pelosi laid down a challenge to her moderate members who were complaining about a provision in the housing bill. Stand up and air your grievances, she said.
A handful of those moderate members did just that, taking to the microphone to gripe that the provision, which would allow bankruptcy judges to rework loans for homeowners, needed to be more restrictive.
Then a surprising thing happened. Pelosi, who disagreed with this critique, huddled at the side of the room with her top deputies — and then buckled. She suspended consideration of the housing bill so more thought could be put into the bankruptcy item.
This hardly amounts to a breakthrough win for party moderates — or a major concession by the speaker. But it was a consequential moment in the minds of moderate leaders who often find themselves marginalized in a caucus dominated by liberals.
“It shows we have bench strength, and it shows we can flex,” said California Rep. Ellen O. Tauscher, who chairs the New Democrat Coalition and played a central role in negotiations over the bankruptcy bill.
Flex? Sure. Win? That’s another matter.Moderates won modest concessions in the housing measure. But the Senate could go much further by drastically curtailing who qualifies under the law. This is a familiar outcome for House moderates, who more often than not lose internal battles with the dominant liberal faction in the House.
Right now, moderates are content fighting behind the scenes to have input in legislation that is commensurate with their size. They argue that when you add up the Blue Dogs, the most conservative of Democrats, and New Democrats, self-described moderates, they account for one-third of the entire caucus.
The last time a cramdown amendment came up in the Senate, in April 2008, it was tabled by a vote of 58 to 36, with 11 Democrats voting in favor. The amendment was sponsored by Senate Majority Whip Dick Durbin (D-Ill.).
On Thursday, Durbin said that he was willing to negotiate on a broad cramdown provision and might support limiting its impact again to subprime and riskier mortgages. Durbin has since said that he is not in favor of limiting the provision in such a way, but his comments last week “kicked up a lot of dust” downtown, according to one financial industry lobbyist.
“It was very encouraging, from where we sit,” said Francis Creighton, vice president of legislative affairs at the Mortgage Bankers Association. “It shows people [are] willing to negotiate and get to a place where we can, if not support the bill, then at least be a little more comfortable.”
Look like a lone Rebublican from Ohio is getting heat from for supporting the bill.
Turner breaks from GOP to support mortgage bill – He’s the only Republican sponsor of the bill Boehner called ‘the worst idea in the world.’
WASHINGTON — U.S. Rep. Mike Turner is the lone Republican signed on to a controversial piece of legislation that would allow judges to reduce mortgage debt for borrowers who file for bankruptcy.
The so-called “cramdown” legislation, a key piece in President Barack Obama’s plan to alleviate the foreclosure crisis, was set for a vote last week, but stalled because of objections from some conservative Democrats. It’ll likely face a vote early this week, according to House Democratic leadership.
Turner, R-Centerville, has supported similar provisions in the past, and last year supported one along with U.S. Rep. Steve Chabot, R-Cincinnati, who lost his 2008 re-election bid. This year he’s the lone Republican cosponsor of the bill.
And how. This week, House Minority Leader John Boehner, R-West Chester, called the proposal “just the worst idea in the world.”
“At a time when we need more liquidity in the market and more certainty for lenders, this cramdown legislation just flies in the face of it and especially the version moving through the House which allows a bankruptcy judge to do anything to a contract — change the amount, change the payment change the interest rate — it’s very bad policy.”
Industry groups such as the Mortgage Bankers Association also have lined up against the bill.
But Jim McCarthy, of the Miami Valley Fair Housing Center in Dayton, said many of the houses in the Dayton region that would be affected by the bill were appraised at a higher value than the property was worth. “There’s no way to make those loans workable unless someone comes in with the authority to say, ‘either negotiate a deal or I’ll restructure the mortgage to keep people in the house,’” he said.
He said Boehner was “dead wrong” in opposing the bill.
Looks like the Washington bankruptcy showdown on the cram-down will be continued……………………………….
Obama Bankruptcy quotes from July 2008:
Families, he said, who “are being preyed upon by predatory lenders. If you’re protecting America, America should be protecting you from unfair bankruptcy laws.”
He said he would create a “fast-track bankruptcy practice” for military families, which would ease restrictions against declaring bankruptcy, eliminate “unnecessary” paperwork and “let them keep a greater share of the value of their home.”
Other past posts from Moe you may like on mortgage banruptcy:
U.S. House Approves Mortgage Bankruptcy Measure
January 28, 2009
The House Panel passed a measure yesterday to allow bankruptcy courts to modify loans on primary residences for troubled borrowers. The controversial legislation that has remained stagnate in Washington for more …
Cram Down Nation: Do Lenders Fear Obama?
January 14, 2009
Obama Bankruptcy quotes from July 2008: Families, he said, who “are being preyed upon by predatory lenders. If you’re protecting America, America should be protecting you from unfair bankruptcy laws.” He said …
FACTBOX: Obama’s new priorities for financial rescue fund
January 13, 2009
An 18-page formal request from the Bush administration on Obama’s behalf said the remaining funds could be used partly to help homeowners and to expand existing programs for financial firms. …
Mortgage Bankruptcy: Can Bankruptcy Save Your Home?
January 12, 2009
If you’re struggling with your mortgage on your primary home, it looks like you may now have some real home saving tools coming soon in the form of a B …
Coakley and Kenner:Guidance for homeowners: Modifying your mortgage
January 12, 2009
Massachusetts continues to experience a dramatic surge in foreclosures, often due to deceitful and predatory lending practices. Many foreclosures have resulted from loan practices and products that were destined to …
Congress Forges Mortgage Bankruptcy Deal With Citi
January 10, 2009
U.S. Senator Dick Durbin (D-IL), with Congressman John Conyers (D-MI), Senator Chris Dodd (D-CT), Chuck Schumer (D-NY) and Congressman Brad Miller (D-NC) announced that an agreement was reached with Citigroup …
{ 3 comments… read them below or add one }
I am so disappointed in Mr. Geitner and Pres. Obama’s foreclosure plan for the country. You two repeated the same as Paulsen – did not make it mandatory for lenders and banks to work with borrowers. AND THEY WILL NOT WORK WITH US. BANK OF AMERICA, got lucky and is not in prison with Mr. Madoff. Lewis has done the same fraudulent acts, but he does not have to go to prison. Lewis received $45 trillion for homeowners and he is in Japan buying an $8 million bank. He has not helped any homeowners.
I think Sheila Blair should be put in charge of homeowner and foreclosures. I believe she can get the job done right.
BOA is refusing my payments at the bank trying to foreclose on me. The bank collections told me I was being refused because of bankruptcy and foreclosure which got reported to credit bureus.
I own a townhouse in Egg harbor Township in New Jersey.The house was bought in December, 2006.
I have been on time with my mortgage payment since then until October,2008 when started facing financial problem. Ever since I have been paying $1500 instead of $2275 a month.
I called my Bankers in September,2008 when I realized I was going to have a problem(at that time I was on time with my payment).
My Bankers,Countrywide, told me I was not in default and so nothing could be done for.
Then in April, 2009 when I had paid $1500/month for 7 months I called them again for help, I was told since I was in default I could not be helped.I must clear all outstanding debts before I can get any assistance.I have furnished my Bankers with details of income and expenditure but to no avail.
It appears to me that my Bankers simply do not want to help, they just want to foreclose on my home and throw my family into the streets.
I urge the Senate to expedite action on the Mortgage Bankruptcy Bill which remains the last hope for many homeowners who are being frustrated by the Banks.
Thank you.
Finally, a good idea. This bill gives new hope for the many people that are facing foreclosure on their upside down homes. There is really no incentive for a struggling family to delay walking away from an upside down home they can no longer afford. It doesn’t make a lot of sense for them to stay in a house when they owe tens of thousands more than it’s worth. This bill would help them stay in their homes with a mortgage they could afford. It would also help the banking industry avoid foreclosure, which is an exorbitant expense for them. This definitely would be a win – win situation for everyone. I sincerely hope this bill passes..