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View Full Version : Legislation: Mortgage relief bill set for House vote Thursday




bobbyw24
02-26-2009, 06:46 AM
http://www.cnbc.com/id/29402624/for/cnbc/
Mortgage relief bill set for House vote Thursday
By: The Associated Press | 26 Feb 2009 | 03:06 AM ET Text Size
WASHINGTON - Debt-strapped homeowners facing foreclosure could resort to bankruptcy to force reductions in their monthly mortgage payments under a measure awaiting a House vote.

The bill set for a vote Thursday would let bankruptcy judges reduce the principal and interest rates on home loans. But the measure has been watered down since Democrats first proposed it, due in large part to mortgage industry lobbying to limit the cost for banks.

The plan is part of a broader housing package that also would raise the Federal Deposit Insurance Corporation's borrowing authority and take other steps to prevent foreclosures.

President Barack Obama called for the bankruptcy measure last week as part of his housing rescue plan. Democrats and consumer advocates regard it as crucial to slowing the rapid rate of foreclosures.

The mortgage industry contends the measure will impose steep and unpredictable costs on its companies, which will be forced to raise fees and interest rates for borrowers. The industry spent millions last year on a successful lobbying effort to kill the bill, which almost all Republicans oppose. Opponents call it the "cram-down."

This year, with Obama in the White House and Democrats enjoying a broader majority, a rift has emerged in the industry. One major player, Citigroup Inc., has bowed to the new political reality and moved to grab a seat at the negotiating table.

It cut a deal last month with Democrats to back the plan in return for some key concessions. The measure now in the House only applies to existing loans made before enactment and is limited to homeowners who have tried working with their lenders to adjust their loans before seeking relief in bankruptcy.

Other banks say they oppose the plan, but have changed their strategy. As they push to squash the legislation, they are stepping up their bid to gut key provisions. Among their goals: restrict the measure to a shorter time-period, certain kinds or sizes of home loans, certain borrowers, or situations where the mortgage holder — known as the loan servicer — agrees to the changes.

"I don't see a scenario where we can ever support this, but we're trying to make it the least-worst way to do the wrong thing," said Scott Talbott, a lobbyist for the Financial Services Roundtable, a trade group representing large banks. The group spent $7.8 million last year lobbying on this and other issues.

The change in tactics has paid off for the banks, now actively bargaining with top Democrats on the details of the legislation.

House Democrats agreed late Wednesday to strengthen the requirement that borrowers prove they tried other ways of modifying their mortgages before resorting to bankruptcy. They also restricted the measure to people who could not otherwise afford to make their home loan payments.

A Senate version of the measure by Sen. Dick Durbin of Illinois, the No. 2 Democrat, is expected to see a vote within weeks.

"We continue to be opposed to the bill and that hasn't changed, but we do live in the real world, and we do understand that this is very likely to happen, and we owe it to our members to recognize that reality and to limit the damage as much as possible," said Francis Creighton, a lobbyist for the Mortgage Bankers Association, which spent $4.2 million on lobbying last year. "We're encouraged by the fact that the bill is moving to limit the damage of cram-down rather than make it worse."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

bobbyw24
02-26-2009, 11:11 AM
A vote on final passage on HR 1106 has been postponed until next week. (They will vote on the rule and continue to debate the bill today but will not take a final vote.)

bobbyw24
02-26-2009, 02:38 PM
UPDATE: US House Vote On Mortgage 'Cram-Down' Bill Delayed
Thursday February 26th, 2009 / 19h10

(RECASTS and UPDATES with more details, including comment from Sen. Durbin, the bill's Senate sponsor)
By Jessica Holzer and Corey Boles Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- House Democrats have pushed back a vote on legislation that would allow bankruptcy judges to rework the mortgage loans of troubled borrowers, amid hesitations from moderate Democrats about the measure.
The postponement comes shortly after the legislation's Senate author, Sen. Dick Durbin, D-Ill., said he would be open to limiting the measure to just subprime mortgages, a large concession to the banking industry.
House Speaker Nancy Pelosi, D-Calif., said the vote, which was scheduled for Thursday, would now occur Monday evening after the Democratic caucus meets with Housing Secretary Shaun Donovan to discuss the measure.
However, she said the House would set guidelines to debate the measure and begin that debate Thursday.
Moderate Democrats are wavering partly due to the remarks by Durbin, banking lobbyists said. Durbin on Tuesday told the American Banker, a trade publication, that, "I'm willing to restrict this to subprime mortgages."
Some Democrats began to balk at supporting the broader legislation amid signs the Senate would consider something more narrow, the lobbyists said. Also, the Obama administration has also proposed tighter restrictions for the legislation.
Democrats asked their leaders for more time to consider the legislation at a meeting Thursday morning, according to a House leadership aide.
Under the legislation, strapped borrowers can have the principal balance of their mortgage loan reduced by a bankruptcy judge - known as cram down. Currently only vacation properties, not primary residences, can be crammed down by judges.
The banking industry has been lobbying fiercely against the measure, saying it would raise borrowing costs on all homeowners. The measure has nonetheless gained momentum in recent weeks due to the shift in power in Washington and the perception that mortgage servicers haven't done enough to help strapped borrowers.
The Obama administration has made it a central plank of its plan to prop up the housing market. However, officials have said they view it as a last resort, to be used only when serious attempts at voluntary modifications fail.
The administration proposed that only borrowers who prove they cooperated with requests from mortgage servicers for essential information be eligible for a cram down. It also proposed limiting court-ordered modifications only to mortgages below the size that Fannie Mae (FNM) and Freddie Mac (FRE) are allowed to own or guarantee.
Neither restriction is contained in the House legislation. However, Rep. John Conyers, D-Mich., this week the measure's chief House sponsor, agreed to tighten eligibility requirements slightly. He has offered an amendment requiring borrowers to provide mortgage servicers a written statement of their income and expenses at least 15 days prior to filing for bankruptcy.
Aside from the bankruptcy measure, the legislation also includes provisions to erect a safe harbor against investor lawsuits for servicers that modify loans and to revamp the Hope for Homeowners program.
-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com
(Michael Crittenden contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=dtQQEJxv%2BJkUfSGav2Eb1A%3D%3D. You can use this link on the day this article is published and the following day.

bobbyw24
02-27-2009, 06:58 AM
House Delays Vote on Modification of Delinquent Mortgages

By Renae Merle
Washington Post Staff Writer
Thursday, February 26, 2009; 4:50 PM



The House delayed a vote on legislation to allow bankruptcy judges to modify the mortgages of troubled homeowners after the measure faced unexpected opposition from some Democrats.

Under the provision, a bankruptcy judge would be able to cut the principal on a homeowner's mortgage, lower the interest rate and extend the terms, provisions known as "cramdowns." Judges are already allowed to modify mortgages for vacation or second homes but not for a borrower's primary residence.

The measure is fiercely opposed by Republicans and the financial services industry, which complain that it would drive up their losses and force mortgage rate increases. But today it was moderate Democrats who questioned the proposal. Some raised concerns that efforts to modify a borrower's loan should take precedence over bankruptcy when a homeowner is struggling, congressional aides said.

"This bill has been fraught with political peril. Members on both side and in both bodies have concerns with the bill and that was evidenced today," said Scott E. Talbott, a senior vice president of government affairs at the Financial Services Roundtable, an industry group.

House Speaker Nancy Pelosi (D-Calif.) said Democrats will meet with Housing and Urban Development Secretary Shaun Donovan on Monday to discuss the measure.

Donovan told the Senate banking committee yesterday that judicial modifications should be a last resort for troubled homeowners -- an argument often made by the financial services industry. "Carefully tailored bankruptcy reform is a piece of the solution," he said. "Well before we get to bankruptcy court in foreclosure, it's critical that we modify these loans in significant numbers. . . . We completely agree that bankruptcy court should not be the place where millions of loans are worked out."

Donovan also said among the potential ideas under consideration is a provision that says that lenders that make a good-faith effort to modify the terms of a borrower's loan won't later have to face a cramdown.

The provision is a key part of a housing package being put together by Congress to codify changes to housing policy called for by President Obama.

Lawmakers could vote on the housing package as soon as Tuesday, according to Democratic leaders.

"The reason that President Obama included bankruptcy in his housing plan . . . is that it has become clear that the banks simply will not help address the housing crisis unless they believe that they must do so if they want to avoid judges making these changes for them," said Sen. Richard Durbin (D-Ill.), who has pushed for the change in the bankruptcy code for years.

Staff writer Dina ElBoghdady and researcher Magda Jean-Louis contributed to this report.