House Deal Reached on Mortgage Write-Down; New Dems Assure Banks Get Theirs
There is apparently a deal in the House on mortgage write-down that satisfies proud "flexers" Ellen Tauscher and her New Democrat Coalition, who bragged to Politico about making it harder for people to qualify for bankruptcy (under the fine leadership of former bank lobbyist Adam Pase). Per CongressDaily (subscription):
The changes to the bill, which would be considered by the House Rules Committee as early as Wednesday, would place further restrictions on eligibility.
It would use the same guidelines as an Obama administration plan, to be unveiled Wednesday, that would allow up to 9 million at-risk homeowners to lower their monthly payments through an interest rate reduction.
However, in a key decision, the new language would not prevent those homeowners that consider the Obama plan from filing for bankruptcy.
Industry groups are arguing that borrowers first should attempt to determine their eligibility for the Obama plan and be required to use that option if it could keep them in their homes. If not, bankruptcy filing should only be the last resort.
The new language would only require a borrower to consider the Obama plan, not mandate that he or she take it. "It’s still a first step, but it [bankruptcy] is still not used as a last resort," an industry lobbyist said.
It also would allow the bankruptcy judge to consider whether a reduction in principal would be required if the lender has offered a loan modification that would still allow the homeowner to make his or her monthly payments. But again, it does not mandate that the judge use a modification without a reduction in principal, which the industry refers to as a "cram-down."
The changes also would require that no fees or charges be paid by the borrower to obtain modification of a loan through bankruptcy.
It also would require that a borrower’s first payment be no more than 31 percent of monthly income without any periods of negative amortization.
Conyers already made changes in a manager’s amendment to pick up support, but the vote count has been shaky because of opposition from banks, which argue that it would increase lending because investors would not be guaranteed any returns.
I cannot tell you how fucking delighted I am that we are making the banks happy. They succeeded in killing mortgage write down in 2007, they kept it out of the stimulus bill, and now they’re writing the details to make it more difficult for the people they ripped off to stay in their homes. Huzzah.
The home of former Wall Street investment banker Tauscher in Washington DC is currently assessed at a value of $3,542,090. (That’s a second home, mind you — the first one being in her district.) Her insistence that she was only doing this to make things easier for the little people rings awfully hollow, and it was frankly insulting that she would work so openly on behalf of bank lobbyists and then try to pretend anything else. These people have been operating in Drudgico culture for way too long, where things become true just because they say it does and their words don’t have to match up with their actions.
We don’t know all the details of the bill yet, and the Senate will most assuredly try to make things worse. In the mean time, above is a video of an Obama Town Hall where he discusses how important this legislation is to stopping the downward economic spiral. Here’s hoping that at long last the banks, Ellen Tauscher, the New Democrat Coalition and predatory lending lobbyist Adam Pase will stop trying to kill the bill and enrich themselves while the country burns.
And as Kagro notes, if this is all kabuki — we’ll soon know it.