The House narrowly passed a wall street reform bill today by a 223-202 vote in which a number of Dems deflected and all GOP's (including Joseph Cao) stayed home.
I'm very disappointed that it did little to offer foreclosure relief. Senator Jim Marshall of Georgia offered an amendment which would have allowed bankruptcy Judges to reduce the principal balance for homeowners. Too many homeowners have ended up in foreclosure because they are upside down and this cram down provision would have provided relief. We currently allow cram downs in bankruptcy for cars and vacation homes, but not for primary residences.
I"m all up for any plausible ideas as to why this was not a good idea. I'm perplexed. Well not really when you consider that this is just par for the course. (cue up the Tiger Woods jokes)
Consider this fact that will be repeated - One in four homeowners with a mortgage are "underwater," meaning they owe more on the home than it's worth.
The House also voted to kill what many experts, consumer advocates and economists believe to be the best -- and perhaps the only -- way to stem the rising tide of foreclosures: a provision that would have allowed judges to cut the principal for struggling homeowners in bankruptcy.
Belying their expressions of outrage towards banks and sympathy for struggling homeowners, enough Democrats joined Republicans to kill the amendment offered by Democrats John Conyers of Michigan and Jim Marshall of Georgia, by a 241-188 vote.
Bankruptcy courts may reduce several forms of debt for distressed borrowers, but not the mortgage on a primary residence. Judges can, however, alter loan terms on vacation homes and cars, for example.
In March, the House passed a bill that was "substantively identical" to today's amendment, according to a summary of the amendment provided by the chamber's Rules Committee. The Senate, however, voted it down, leading Sen. Dick Durbin (D-Ill.), a longtime advocate for homeowners, to conclude that banks "frankly own the place."
The empirical data and the experts were ignored to protect the banks once again.
One in four homeowners with a mortgage are "underwater," meaning they owe more on the home than it's worth. The administration's $75 billion foreclosure-prevention effort does virtually nothing to help those homeowners, consumer advocates and economists argue.
Furthermore, since the program's launch in March, less than 32,000 troubled homeowners have received permanent relief through the government's mortgage modification plan. It's supposed to help three to four million homeowners avoid foreclosure.
"You would think that would be a strong argument for doing something about it," Miller said. "And with the continued foreclosure rate and the effect that's having on home values and the effect they're having on each other, being such a downward force on our economy. But there's just a united front of opposition by the financial industry. If some members are playing it by thinking, well, I'll give them this vote but then I'll vote for the CFPA, I guess I can see that calculation."
I'm in the middle of trying to get a modification and it has taken four months. So I can't say if this program is working or not. And I've had to pester my mortgage company to make sure that they are sending the paperwork. I could easily see where homeowners would throw in the towel and where they could get misinformation. Having dabbled in bankruptcy law, I find it absolutely ridiculous that the house cannot be crammed down to what it is worth.
Your thoughts -also cross linked at The Progressive Electorate
What are your thoughts