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The bankruptcy loan modification legislation, a key part of the president's housing policy, is (get used to it) held up in the senate while leadership looks for sixty votes to break a filibuster of the bill. The legislation, which is opposed by the mortgage loan industry, would allow bankruptcy judges to modify primary home loans so borrowers can afford to pay them; currently, primary home loans are the only loans that judges cannot adjust during bankruptcy proceedings. A Democratic senate aide, who wouldn't speak on the record while negotiations are on-going, tells me that Senator Dick Durbin, who is managing the legislation, needs to find a few Republicans to support cloture. After that, the bill will come to the floor -- it could be as soon as next week or after the Easter recess. More from the aide...
We are working with groups on all sides, major lenders, credit unions, Democrats and Republicans in an effort to try and get this language to a place where we can pass it. Opponents of the bill want to narrow it to only sub-prime mortgages, and that's pretty much a non-starter. Every argument opponents of the bill have offered is the same old song and dance, same stuff we've been hearing from the mortgage lenders for years. Doing this will increase rates across the board. Not true. Doing this will cause a flood of people going into bankruptcy, not true. Bankruptcy attorneys who support the bill and [Attorney Generals] who support the bill all say that bankruptcy is not a good thing, nobody wants to declare bankruptcy, [but this bill is necessary]. The opponents are not offering any alternatives.Negotiators have already agreed to limit the provision to only mortgages issued at the time the bill is enacted, so future mortgage holders couldn't take advantage of the provision. The usual suspects in the GOP are being approached -- Spector, Snow and Collins, as well as less frequently seen compromise players like Tennessee's Bob Corker and Florida Senator Mel Martinez. Martinez, whose state has one of the worst foreclosure rates, should be receiving a lot of pressure from his constituents to get behind the legislation.
-- Tim Fernholz
