Monday, March 02, 2009

Jane Harman - Against the Mortgage Modification ("Cramdown") Bill?

The bill is H.R. 1106 - Helping Families Save Their Homes Act of 2009 (Rep. Conyers/Frank – Judiciary/Financial Services).

More about the bill from Chris Bowers at OpenLeft:
One of the key policies needed to solve the housing crisis will be mortgage "cram down" legislation. "Cram down," which is probably poorly named, will allow bankruptcy judges to reduce mortgage payments to match current home values, rather than the inflated values of the housing bubble era (read more on "cram down" here). This legislation, introduced by Representative John Conyers (D-MI) in the House (HR 200), and Senator Dick Durbin (D-IL) in the Senate (S 61), will allow hundreds of thousands of people to stay in their homes at this critical juncture in our economy. It is supported by President Obama, andincluded as a principle in the administration's housing plan (see page 4).
If you want to get a feel for why judges should have the ability to write down the principal and interest of mortgages of homeowners in bankruptcy court, you need to remember that the home buyer who took that mortgage was at a distinct disadvantage when taking out their loans -- it is very easy for brokers to pretend to be on your side while working with the banks to give you the worst loan possible, because that generated higher upfront fees for them. Pretty ugly. And it's led to people being kicked out of their homes. Check out this video:

So where's Jane Harman on this bill? You'd think this would be a no-brainer, but she's no where to be found. This is unfortunately another instance where the Congresswoman doesn't feel obliged to let her constituents know where she stands on this issue. No public statements, announcements on her website and nothing coming from the folks who answer her phones.

However, it's advisable to assume that she's working on the wrong side of this bill (e.g. trying to weaken it). Here's why:

Yes, of course there's the fact that she's a member of both of the groups that are fighting to weaken this bill and make it more mortgage-industry friendly. Those groups are the Blue Dogs and a New Democrats (Harman proudly announces her membership on her website. That's not to say she is necessarily participating, though.

The real reason to be suspicious is her past history of siding with lenders over the people's interests: Jane Harman voted for the 2005 Bankruptcy Bill
And given the changed circumstance with House control since then, it's not like we would expect Harman to come out and announce her opposition to this legislation. Rather, it would most likely be to work behind the scenes.
Circumstances have obviously changed some since the 2005 vote. For one thing, Democrats have regained the majority in both houses of Congress, and now hold the White House. In 2005, under Republican control, this bill was destined to pass pretty much regardless of what Democrats did (in the House, anyway). Now, with considerably more control over outcomes, front line responsibility for actual governance, and a mortgage foreclosure crisis that's hitting constituencies all over the country, positions have changed and votes will follow. Even among those who might otherwise have openly opposed this bill, the politics are such that outright opposition is a dangerous prospect, and the play instead is to fight a rearguard action, tinkering at the margins of the bill in the House, while hoping for a far weaker measure in the Senate, and throwing one's support behind that instead. That's what to look for from any opponents among House Democrats today, there being no real opportunity to stop the bill or make major changes today.

The fact that the bill is coming to the floor is an indication that they've done their vote counting, and there's no major threat on the horizon. Forty or so defections could actually kill the bill, assuming united Republican opposition, and it's not entirely clear that that's to be expected. Seventy-three Democrats voted for the bankruptcy bill in 2005, nine of whom are no longer in the House. Two Progressive Caucus members joined them, but might not be likely to do so again if they had the opportunity.
I have no doubt that the mortgage and banking industry is pushing hard to defeat or at least weaken this legislation, and that they're pushing Jane Harman to do their bidding.

If Jane Harman doesn't take a stand ahead of the vote, then we really have no way to tell whether she's fighting for our interests, or those of Countrywide's.

Something that bears watching.