Mortgage Modification Act and Politics as Usual

“Modern politics is, at bottom, a struggle not of men but of forces. The men become every year more and more creatures of force, massed about central powerhouses. The conflict is no longer between the men, but between the motors that drive the men, and the men tend to succumb to their own motive forces. “          

–Henry Adams 

The debate over foreclosure rescue acts and stimulus package earmarks for consumers continues unabated. This political struggle is an excellent case study in modern politics. While homeowners struggle to make their mortgages, a battle of the titans between bankruptcy lobbyists and the banking and financial sectors rages on moderated by politicians trying to appease both forces simultaneously.  And, in my opinion, the media fails miserably to protect and inform American citizens while lobbyists influence political decisions that will directly impact the quality of life in America for generations to come. This state of affairs is sickening.

I’ve been following the mortgage modification bill recently. Titled as the “Helping Families Save their Homes in Bankruptcy Act of 2009”, if passed this act will provide judges the authority to modify loans. A Judge’s authority will include the ability to reduce interest rates permanently, reduce principle balances permanently and extend the term of loans as well. A law like this is absolutely necessary to stave off the massive wave of foreclosures that flood servicing pipelines presently and thousands more foreclosures forecasted in the future.

One of the most common arguments against acts like this and other stimulus incentives is that homeowners were aware of the terms of their loans when they applied for them and hence, it is only their fault that they can’t afford their payments. This is nothing less than a gross overgeneralization that fails to take in to account rampant loan fraud and predatory lending; unscrupulous practices that have been commonplace sine the beginning of the housing boom in America. From non-English speaking Americans asked to sign on the dotted line in a language they can’t understand to educated consumers being told that negative amortization loans were “sound financial instruments”, there is more than ample evidence to justify removing loan modification authority from the perpetrators of fraud and giving that authority to judges that devote their lives to the cause of justice.

Dutiful, hardworking taxpayers call their servicers to try and negotiate a loan workout plan only to find loss mitigation departments that keep them on hold for hours and ultimately transfer them to glorified collection departments that treat them like criminals. Many of these distressed consumers are bilked out of money by loan modification scam artists because they have no one else to turn to. It’s a sad state of affairs and the American public should be upset.

While foreclosures far outpace successful loan modifications, lobbyists in the banking and investment sectors spend millions trying to influence politicians to maintain the status quo. The political forces trying to stop this bill from passing and the methods employed to appease opponents of the bill make me nauseous. 

The Washington Post ran a typical article on the bill today…the typical journalist write up consisting of “just the facts.” Unfortunately, the average reports on “facts” are nothing more than highly orchestrated public relations statements from politicians, lobbyists and corporations that journalists feel somehow translates to “news.” The Post reports on nothing less than an obvious “my hand washes your hand” slimy political tradeoff in the same breath as describing “homeowners in distress.”

From the Washington Post: 

…according to several congressional aides, the bankruptcy legislation could be combined with a measure to increase the Federal Deposit Insurance Corp.’s borrowing authority. Banks have supported that provision because it could potentially prevent a significant increase in the fees they pay the FDIC.

Dan Mica, a former congressman who is president of the Credit Union National Association, met with Durbin on Wednesday and spoke with Schumer yesterday about the legislation. Schumer said last week that he would introduce legislation to lift the cap on how much credit unions can lend, a measure pushed by the industry. In their meeting, Schumer told Mica that he might attach that provision to the bankruptcy modification bill, according to a Senate aide.  

It doesn’t take a genius to see that the passage of this bill, designed to combat rampant fraud, is dependant on promises from our political leaders that lenders will be allowed to offset their losses by paying less to the FDIC or, in the case of credit unions, increasing their lending capabilities.

I understand that journalists are trained not to editorialize. However, and in my humble opinion, when staff writers fail to point out blatant acts of “dirty politics as usual” they do a disservice to the public. The more that writers “report on the facts” without exercising their god given consciousness, they only make dirty politics as usual seem commonplace and, over time, acceptable.

Aside from the failure of journalists, shouldn’t we be asking ourselves why politicians can’t pass acts designed to combat blatant fraud without having to pay off the perpetrators of fraud? 

Perhaps my concerns and opinions are naïve…perhaps I’m just an idealist that doesn’t understand the true nature of politics. Or, perhaps, I’m just like the millions of other Americans that have been conditioned to accept the failure of the media to provide quality news and accept the fact that it’s o.k. for businesses and lobbyists to control our politicians and, hence, our collective destiny.

If you would like to write to your Senator about this Act, Color of Change has a very simple method of insuring your voice will be heard

Sources Cited:Washington Post; Govtrack.us

Tagged as: Bankruptcy, foreclosure rescue, Kenneth M. Corioso, Loan Modification, mortgage modification, Mortgage Modification Act