Blog - Articles Tagged 'Housing'

• S.1 – American Recovery and Reinvestment Act of 2009

A bill to create jobs, restore economic growth, and strengthen America’s middle class through measures that modernize the nation’s infrastructure, enhance America’s energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief, and protect those in greatest need, and for other purposes.

• S.2 – Middle Class Opportunity Act of 2009

A bill to improve the lives of middle class families and provide them with greater opportunity to achieve the American dream.

• S.3 – Homeowner Protection and Wall Street Accountability Act of 2009
  
  A bill to protect homeowners and consumers by reducing foreclosures, ensuring the availability of credit for homeowners, businesses, and consumers, and reforming the financial regulatory system, and for other purposes.

• S.4 – Comprehensive Health Reform Act of 2009

A bill to guarantee affordable, quality health coverage for all Americans, and for other purposes.

• S.5 – Cleaner, Greener, and Smarter Act of 2009

A bill to improve the economy and security of the United States by reducing the dependence of the United States on foreign and unsustainable energy sources and the risks of global warming, and for other purposes.

• S.6 – Restoring America’s Power Act of 2009

A bill to restore and enhance the national security of the United States.

• S.7 – Education Opportunity Act of 2009

A bill to expand educational opportunities for all Americans by increasing access to high-quality early childhood education and after school programs, advancing reform in elementary and secondary education, strengthening mathematics and science instruction, and ensuring that higher education is more affordable, and for other purposes.

• S.8 – Returning Government to the American People Act

A bill to return the Government to the people by reviewing controversial “midnight regulations” issued in the waning days of the Bush Administration.

• S.9 – Stronger Economy, Stronger Borders Act of 2009

A bill to strengthen the United States economy, provide for more effective border and employment enforcement, and for other purposes.

• S.10 – Fiscal Responsibility Act of 2009

A bill to restore fiscal discipline and begin to address the long-term fiscal challenges facing the United States, and for other purposes.

TAPPED broke this list on Tuesday, and they have some more information on some of these bills from a Democratic aide on the hill.

The full text of these bills hasn’t been published by the Government Printing Office yet, but it should be available within the next 24 hours or so. Check back at the “see full bill text” link on the OpenCongress bill pages. In the meantime, you might want to start tracking some of these with your “My OpenCongress” account (login or register) to be alerted to any legislative action that is taken and every new blog post or news article is published about them.

These first 10 Senate bills are mainly symbolic. They’re a statement of the Democrats’ legislative priorities at this point for the next two years, but any legislative action that’s taken on these measures could very well come in a different form. The first ten Senate bills of the last session included some measures that were enacted (minimum wage increase, ethics reform), some that were vetoed by President Bush (funding for stem cell research) and some that were hotly debated but never passed Congress (comprehensive immigration reform).

UPDATE: Way more info on all these bills from the Democratic Policy Committee. Be sure to check it out.

Atrios and Yglesias point out the absurdity of news reports tonight that Citigroup has reached a deal with members of Congress to let bankruptcy judges alter troubled mortgages. I agree; and I suppose there are two stories here, then – that Congress may finally pass this major foreclosure prevention policy into law this session and that the media now takes corporate control of lawmakers as a given.

Here’s the story as reported by Congress Daily ($):

>Citigroup Inc. agreed Thursday to changes in Democratic legislation that would allow bankruptcy judges to reduce the principal of the mortgage to a home’s market value, handing a major setback to the banking lobby that has stymied the measure’s passage for two years.
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>Senate Majority Whip Durbin announced he had reached an agreement with Citigroup over three changes to his bill that would provide a stick to lenders to force them to drive down the principal of the mortgage to make it more affordable for at-risk homeowners.
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>Only existing mortgages would be eligible and homeowners would have to contact their lender at least 10 days before filing.
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>In addition, only major violations of the Truth In Lending Act would invalidate creditor claims during a bankruptcy proceeding, rather than those of any size.
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>The banking industry has fought attempts to bring Durbin’s bill up for a vote as well as a companion bill by Rep. Brad Miller, D-N.C., in the House because it would force them to write off the losses on their books.
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>The Senate last year tabled Durbin’s bill by a 58-36 vote and opposition from moderate Democrats prevented Miller’s measure from reaching the House floor last session.

In November 2007, 16 moderate Democrats sent a letter to Judiciary Chairman John Conyers expressing their opposition to the bill to let bankruptcy judges alter mortgages. Their letter caused Conyers to pull the bill out of a committee markup session that had been scheduled.

In their letter to Conyers the moderate Democrats didn’t say that their problem with the bill was that financial corporations were against it. They said there problem was that it would interfere with a different bankruptcy bill from 2005 that hadn’t been given enough time to fully take effect.

Now that Citigroup has agreed to allowing bankruptcy judges to alter troubled mortgages, it will be interesting to see if those moderate Democrats are still concerned about it messing with the 2005 bill.

The House of Representatives on Thursday will place their vote on a major housing and mortgage reform bill, the Helping Families Save Their Homes Act, that has been in the works for months. This is the “cram-down” bill, which would allow bankruptcy judges to modify mortgages for homeowners facing foreclosure. It’s basically the bill that was negotiated with Citigroup back in January.

The version that’s coming to the floor has some more added to it – legal protections for servicers that renegotiate mortgages, changes to the Hope for Homeowners program, and more (details here).

The House Committee on Rules just wrapped up a long meeting to whittle the 41 amendments that were submitted to the bill down to four for consideration during tomorrow’s floor debate. Here are the ones they agreed to bring to a vote by the full House:

• Conyers, John: (REVISED) The amendment would
  
  (1) require courts to use FHA appraisal guidelines where the fair market value of a home is in dispute;
  
  (2) deny relief to individuals who can afford to repay their mortgages without judicial mortgage modification; and
  
  (3) extend the negotiation period from 15 to 30 days, requiring the debtor to certify that he or she contacted the lender, provided the lender with income, expense and debt statements, and that there was a process for the borrower and lender to seek to reach agreement on a qualified loan modification.
  
  It also would require a GAO study regarding the effectiveness of mortgage modifications outside of bankruptcy and judicial modifications, whether there should be a sunset, the impact of the amendment on bankruptcy courts, whether relief should be limited to certain types of homeowners. The GAO must analyze how bankruptcy judges restructure mortgages, including the number of judges disciplined as a result of actions taken to restore mortgages.
  
  The Amendment would clarify that loan modifications, workout plans or other loss mitigation plans are eligible for the servicer safe harbor.
  
  Requires HUD to receive public input before implementing certain FHA approval provisions.
  
  With respect to the HOPE for Homeowners Program: recasts the prohibition against having committed fraud over the last 10 years from a freestanding prohibition to a borrower certification. Would amend the National Housing Act to broaden eligibility for Home Equity Conversion Mortgage (HECM) or “reverse mortgage.”
  
  Would provide that the GAO must submit to Congress a review of the effects of the judicial modification program.
  
  Would require the Comptroller of Currency, in coordination with the Director of Thrift Supervision, to submit reports to Congress on the volume of mortgage modifications and issue modification data collection and reporting requirements.
  
  Would express the Sense of Congress that the Treasury Secretary should use amounts made available under the Act to purchase mortgage revenue bonds for single-family housing.
  
  Would express the Sense of Congress that financial institutions should not foreclose on any principal homeowner until the loan modification programs included in H.R. 1106 and the President’s foreclosure plan are implemented and deemed operational by the Treasury and HUD Secretaries.
  
  Would establish a Justice Department Nationwide Mortgage Fraud Task Force to coordinate anti-mortgage fraud efforts.
  
  Would provide that the Treasury Secretary shall provide that the limit on the maximum original principal obligation of a mortgage that may be modified using EESA funds shall not be less than the dollar limit on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation that is in effect at the time the mortgage is modified. (30 minutes of debate)




• Price, Tom (GA): Would provide that if a homeowner who has had a mortgage modified in a bankruptcy proceeding sells the home at a profit, the lender can recapture the amount of principal lost in the modification. (10 minutes of debate)




• Peters, Gary (MI):Would provide that, in the case of a debtor whose home is in foreclosure, the debtor could meet the pre-filing credit counseling requirement by receiving counseling either before filing or up to 30 days after filing. (10 minutes of debate)




• Titus, Dina (NV):Would require a servicer that receives an incentive payment under the Hope for Homeowners program to notify all mortgagors under mortgages they service who are “at-risk homeowners” (as such term is defined by the Secretary), in a form and manner as shall be prescribed by the Secretary, that they may be eligible for the HOPE for Homeowners Program and how to obtain information regarding the program. (10 minutes of debate)
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There’s something happening behind the scenes with Congress’s portion of the Obama foreclosure prevention plan, but it’s hard to figure out exactly what it is.

For weeks, the financial industry, Republicans, and centrist House Democrats have been fighting a provision in the bill (H.R. 1106) that would allow judges to modify the terms on mortgages for homeowners that go into bankruptcy. This provision, commonly referred to as “cram-down,” is the “stick” in Obama’s plan; the mechanism that will encourage lenders to modify subprime mortgages so they are more affordable to struggling homeowners. The “carrot” in the plan is that lenders that modify loans voluntarily will be given cash bonuses from the government – $1,000 for each loan modified, more if borrowers stay current on their payments.

While the carrot option is estimated to cost the government $75 billion, the cramdowns would come at no cost to the government.

Opponents call the provision “overly broad.” They argue that the courts would end up modifying too many mortgages, creating additional risk for lenders and scaring off banks from lending in the future.

The New Democrats Coalition, a 63-member group of moderates in the House, has been pushing the Democratic leadership to make changes to the cram-down provision, and, as David Waldman points out, they have basically won. According to Tauscher’s office, the changes, which were virtually cleared for passage by the vote approving the rule governing debate, include using FHA appraisal standards to determine a home’s value, requiring that the loan be “unaffordable” and not just more than the current home value, and several more. See the full list here.

But after the New Democrats’ victory last week, House Speaker Rep. Nancy Pelosi [D, CA-8] pulled the bill from the floor in what is being widely being reported as a second victory for the New Dems. Here’s how CongressDaily (subscription-only, but reprinted by Atlantic) reported it, for example:

Moderate House New Democrats showed their influence Thursday after they forced changes and later stalled consideration of legislation allowing bankruptcy judges to modify home mortgages, including reducing the principal of a loan.

And New Democrat Chair Rep. Ellen Tauscher [D, CA-10] on the bill being pulled:

It shows we have bench strength, and it shows we can flex.

The bill is now scheduled to be back on the House floor Thursday. The big question is, if the New Democrats have already won their changes, what is the delay for?

In a separate CongressDaily ($) article, “tightening standards for a homeowner to enter bankruptcy” is listed as one of the changes to the bill that New Dems were pushing for. The only thing I see in the list of changes as described by Tauscher’s office that could possibly fit that is item #5 – “Specify that in addition to a phone call requesting a loan modification, the debtor must certify that he/she provided income, expenses, and debt to the holder of the mortgage.” But that seems pretty minor, while “tightening standards for a homeowner to enter bankruptcy” could potentially encompass much more. It’s possible there are additional changes along those lines being worked out behind the scenes. Depending on the details, changes fitting that description could severely reduce the effectiveness of the “stick.”

Back to the first CongressDaily article (read it here):

Sources close to the process said House Speaker Pelosi wants to pass the bill soon. And while Judiciary Chairman John Conyers, who sponsored the bill, said Thursday he did not foresee further changes, other Democratic aides and lawmakers said they did not see that as realistic.

“I don’t think this is going to get fixed without going back to Rules,” said one aide.

Rep. Allen Boyd, D-Fla., a prominent Blue Dog Coalition member, told CongressDaily Thursday it is his understanding Democratic leaders plan to send the bill back to the Rules Committee next week to make additional changes along the lines of those called for by New Dems like Rep. Ellen Tauscher, D-Calif., the coalition’s chairwoman.

UPDATE: Some initial indications of what the new compromise with the New Democrats will look like (Bloomberg):

House leaders are embracing a plan being pushed by the New Democrat Coalition, which calls itself a group of “moderate” legislators. The group’s plan would require borrowers to seek loan modifications from their banks before qualifying for changes in their mortgage terms through bankruptcy protection.

“More along the lines of trying to ensure that before you get there, there has been a good-faith effort to utilize other programs available,” Hoyer told reporters.

Under the compromise, bankruptcy judges would have the discretion to decide whether banks had offered a “qualified loan modification” that would bar borrowers from cramming down their mortgage in bankruptcy, according to an e-mailed summary of changes being circulated by Democratic staff.

Sounds like a pretty mild change to me. I’ll update with the specifics as they become available.

As I’ve been writing about recently on this blog, a group of moderate House Democrats, the New Democrats Coalition, has been holding up passage of a major component of President Obama’s foreclosure prevention plan, the Helping Families Save Their Homes Act. The New Democrats have concerns about the “cramdown” provision in the bill, which would allow the courts to modify terms and reduce the principle on primary-residence mortgages that are going into foreclosure. Like the banking industry, they worry that the provision is overly broad and that the courts new powers could result in big losses for the banks, thus discouraging them from lending in the future.

For the past few days, the New Dems and the House leadership have been engaged in behind-the-scenes negotiations over the cramdown provision, and they have finally decided on a way to move forward. A New Democrat-sponsored secondary amendment will be offered to John Conyers’ manager’s amendment, and together they will account for all the concessions to the bill that the moderates appear to be requiring for their support.

Jane Hamsher at FireDogLake has obtained a copy of a “Dear Colleague” letter being circulated on the Hill by New Democrat Chairwoman Rep. Ellen Tauscher [D, CA-10] (pictured), Blue Dog Rep. Dennis Cardoza [D, CA-18] and California Democratic Congressional Delegation Chairwoman Rep. Zoe Lofgren [D, CA-16] explaining all the concessions they have won and asking their colleagues to support the bill.

Major changes made to H.R. 1106

During Committee consideration:

1. Judicial modifications were limited to existing loans.

2. A “clawback” provision was included to specify that increases in property values over the first four years of the bankruptcy plan would be returned to the lender, based on a sliding scale.

The manager’s amendment and second-degree Lofgren-Tauscher-Cardoza amendment made a number of additional changes, including:

1. Ensuring that a judge considers whether a qualified loan modification that is consistent with President Obama’s plan was offered prior to considering a judicial modification;

2. Incorporating the Administration’s debt-to-income and interest rate limits as considerations for determining whether an interest rate reduction in lieu of a principal reduction is warranted;

3. Changes to ensure that judges use FHA appraisal guidelines in determining the fair market value of a property;

4. Improvements in the predictability of payouts by mandating that the debtor make equal monthly payments on their restructured debt;

5. Specifications in the pre-filing requirement that in addition to a phone call requesting a loan modification, the debtor must certify that he or she provided information on income, expenses, and debts to the holder of the mortgage;

6. Extending the pre-filing requirements to request a qualified loan modification from 15 days to 30 days to allow sufficient time for the loan modification process;

7. Changes to ensure that judges must deny judicial modification in cases where the debtor could otherwise afford the loan. This will prevent wealthy people from taking advantage or falling real estate prices;

8. A GAO study to determine whether Chapter 13 proceedings are working to prevent foreclosures and the effect this is having on access to credit;

9. Extending FHA, VA and rural housing assistance guarantees to adjustments as a result of judicial loan modifications.
10. Amending the “clawback” provision to increase the amount of appreciation owed to the lender in the case of a home sale during the bankruptcy.

The complete legislative text of the Lofgren-Tauscher-Cardoza amendment can also be viewed as a pdf file.

As Chris Bowers at OpenLeft notes from a CQ ($) article, the deal on the amendment was also worked out with some Senate staff, so the bill may have a better chance at getting through the Senate intact than had previously been thought.

In February, President Obama announced a plan to help families with troubled mortgages stay in their home. One of the key components of the plan, giving judges the power to modify loans for homeowners in bankruptcy, requires approval from Congress (H.R. 1106), but Senate moderates are threatening to block it for now and to push for a weaker version of the provision down the road.

Congress Daily ($) reports:

Reid Might Drop Cram-Down Provision From Banking Bill



Senate Majority Leader Reid said today he would drop a cram-down provision from a House-passed banking bill if the language threatened to keep the Senate from passing the overall bill. The provision would allow a bankruptcy judge to reduce a homeowner’s mortgage principal. “If we can’t get the votes for that, and I am hopeful we can – I am semiconfident we can – then what I’ll do is take that off [the bill] and do the other banking provisions,” Reid said at a Christian Science Monitor breakfast. Reid said he would work to keep the package intact, but raising the prospect of pulling the provision seemed to acknowledge assertions by Sen. Evan Bayh, D-Ind. [pictured at right], and others that the cram-down bill cannot pass due to opposition from Republicans and some Democratic moderates.



Bayh and Judiciary ranking member Arlen Specter are pushing an alternative bill that narrows the range of borrowers who could have their mortgage principal reduced. Lobbyists tracking efforts by Senate Majority Whip Durbin to drum up industry and Senate support for a measure like the House bill said talks appear stalled. Eliminating or watering down the cram-down provision would be a win for the banking industry and Sen. Bob Corker, R-Tenn., who has pushed to move banking provisions separately from the cram-down measure. Democrats hope to move the package after the spring recess.

The “cram-down” provision is the “stick” in Obama’s plan; it is the mechanism that is designed to encourage lenders to actually modify at-risk mortgages so they are more affordable to struggling homeowners. The “carrot” in the plan is that lenders who modify loans voluntarily (making a “cram-down” unnecessary) will be given cash bonuses from the government – $1,000 for each loan modified, and more if borrowers stay current on their payments. While the carrot option is estimated to cost the government $75 billion, the cramdowns would come at no cost to the government.

The Senate moderates are probably going to push a version of the cram-down that applies only to homeowners with subprime loans. David Waldman at Congress Matters – noting the contradiction in not wanting to reward irresponsible borrowers, but limiting the bill to apply to probably the least responsible borrowers of all – provides a possible explanation for what might actually be behind this:

The answer, I think, is that the subprime problem has already done the bulk of its damage to the banking industry, so they don’t stand to lose much more if the bill is limited in that way. Plus, most people know that “subprime” is a term connected to “problem” mortgages, and if they’re paying any attention at all, they’ll simply think something that sounds good – mortgage relief – was given to people having “problems,” and they’ll never inquire any further than that.

Congress’s leading bill to address the foreclosure crisis has been stuck in the Senate for the past five weeks, but a deal may have finally been reached. It looks like the main provision of the The Helping Families Save Their Homes Act of 2009, which would let bankruptcy judges rework mortgages for homeowners facing foreclosure, including a “cram-down” of the principle, would be significantly weakened.

CongressDaily ($):

The potential deal, according to sources, would add teeth to a House-passed bill that would allow a judge to consider whether the lender has offered the homeowner a new Obama administration plan to help up to 9 million borrowers avoid foreclosure by allowing them to refinance at lower interest rates. The Senate compromise would mandate that if a lender offered a modification through the Obama plan or a program included in last year’s housing bill, called the Hope for Homeowners Act, the homeowner would be ineligible to modify their loan through bankruptcy.

In early March, when the bill went through the House, California Democratic Reps. Ellen Tauscher, Zoe Lofgren and Dennis Cardoza added an amendment directing bankruptcy judges to consider whether a loan modification consistent with President Obama’s plan was offered prior to the consideration of a judicial modification. The Senate deal would take this guideline and turn it into a strict rule: if the lender makes an offer to refinance at a lower rate, the judge can not intervene to make changes to the terms of the mortgage. It gives lenders final control over how loans can be reworked, not the judges.

It would also mean that the mortgage lenders wouldn’t be forced into taking losses. More homeowners would end up with the interest reductions from Obama’s plan, which would come at a cost to the government, not to the banks. Obama’s plan includes a dollar-fordollar matching fund to help bring down interest rates for borrowers and a $1,000 upfront bonus for lenders each time they adjust the interest rates of a loan.

Rep. Brad Miller [D, NC-13], who has been the leading cram-down advocate in Congress, has said the banks are opposed to the cram-downs because they would be shown on their already damaged balance sheets. They want to avoid acknowledging that the mortgages on their books are actually worth a lot less than what they are claiming. It would make it even more obvious that many of the big banks are essentially insolvent zombies. Stretching out payment plans and lowering interest through the Obama plan, on the other hand, would not affect their books. This really isn’t a surprise because it has been the trend in all our economic policies recently — protect the appearance of the banks’ balance sheets and put the costs of the economic crisis on the government.

Here are the other details CongressDaily provides on the deal in the Senate:

The possible deal has other provisions. At-risk low-income borrowers and those who pay less than 31 percent of their income for mortgage payments would be ineligible for principal reduction, but they could have their rates reduced or their loans amortized over a longer time. If a homeowner opted for a modification under the Obama plan and wound up paying a quarter of income or less for the mortgage, he or she would be ineligible for any bankruptcy modification. If the principal is reduced by a judge, the possible compromise would allow the lender and borrower to evenly split any profit up to the original amount of the loan if it is sold while the homeowner is still in bankruptcy. Only loans that originated before 2009 and amount to less than $729,750 could be modified in bankruptcy. The program would end in 2014.

It’s looking increasingly likely that cramdown, a provision giving judges the power to reduce mortgage principals and interest rates for homeowners in bankruptcy, will be removed from the the housing bill (H.R. 1106) this week by the Senate.

Of the two avenues for reworking troubled mortgages in President Obama’s housing plan, cramdown is the one that would not give more taxpayer money to banks. It would be free of cost to taxpayers while the other avenue, incentive payments for voluntarily lowering interest rates, is estimated to cost $75 billion. Furthermore, cramdown is the “stick” in the plan. It would put pressure on the banks to actually do something with troubled mortgages. Without cramdown, there is no incentive for a bank to lower an interest rate if they determine that it would cost them more than the $4,000 government bonus they would get for doing so.

So far, all the foreclosure prevention plans that rely on voluntary participation from the banks have failed. If cramdown is removed from the current bill, we will be left with another voluntary plan plus some cash bonuses for banks. Homeowners who owe much more than the current value of their house will still not be helped.

From the New York Times, here’s an estimate of what removing cramdown might do to the overall foreclosure plan:

The Moody’s Economy.com analysis estimates that up to two million mortgages will be voluntarily modified under the Obama plan and that up to 1.25 million will be modified in bankruptcy court.

If [cramdown does] not pass, Moody’s Economy.com says its estimate of the number of modifications would drop by more than half, with 475,000 fewer voluntary modifications and zero court-approved modifications.

UPDATE: The Senate debate, which is happening now, is actually on S. 896, which is the Senate’s version of H.R. 1106, but without cramdown. Cramdown will be submitted as an amendment by Sen. Durbin (D-IL) and is expected to fail. No other cramdown-related amendments will be in order for consideration.

UPDATE 2: The amendment failed, 45-51, with 11 Democrats voting against. Roll call details soon. View the full roll call details here.