The Senate has spoken, and a loan-modification bankruptcy bill is not going to gain passage this year.  Yesterday, Senators voted 51 against and 45 for on a motion to continue deliberation.

The Helping Families Save their Homes Act, referred in the House as HR 1106, stalled in the Senate.  Observers credit its defeat to pressure from Wall Street.  Even then, though, it appears that opposition was hardly uniform among banks: Citigroup even announced its support for the provisions in the proposed legislation.

This is a shame for anyone interested in finding a realistic solution to prevent just the kind of paralysis that allows this foreclosure crisis to spiral out of control.  The bill hardly takes borrowers off the hook.  Rather, it merely introduces a place for judgment in individual cases.  Bankruptcy court judges, who already have the ability to make modifications on loans for yachts, second homes, and automobiles, are denied the same powers as a result of yesterday’s decision in the Senate.

The stakes are high.  Home mortgage debt is the single largest element of household borrowings in the country, with estimates suggest that Americans owe more than $14 trillion on their homes.  The next closest category – credit card debt.  We “only” owe about $950 billion on our cards, though.

Its interesting that a consumer protections bill for credit cards is likely to pass, while a home mortgage bill appears to have failed.

In the last administration, the action of regulators could be summed up like this:

1) We reserve the right to regulate, and we deny states the right to regulate within their state.

2) We choose not to regulate.

It was a nice one-two punch.  In North Carolina, some good anti-predatory lending laws were enacted that should have shielded our residents from many problems.  When in place, the state rules worked.  State-regulated institutions (including BB&T, the largest) followed those rules.

Still, national banks argued that they didn’t need to heed states.  It was too hard to follow rules in 50 places.  Better to follow one rule.  Even better, if the one rule was essentially saying that “there should be no rules.”

In Wachovia v. Watters, the Court emphatically ratified this regulatory principle into law.

Fast forward to today’s hearing, though.  In Cuomo vs. The Clearinghouse Association, the Justices will hear arguments related to New York Attorney General Eliot Spitzer’s investigation into mortgage pricing.  Spitzer was denied the ability to issue subpoenas after he used publicly available data to find discrepancies in lending prices to minorities.

Spitzer had to move on to pursue other opportunities.  Andrew Cuomo has gladly filled in for him, though, and he is the author of the filing heard today.

Bankers have traditionally argued that the publicly available data, from the Home Mortgage Disclosure Act, paints a false picture because it does not contain all of the relevant data that goes into underwriting decisions.  That is true.  Credit scores are omitted, as are loan-to-value ratios.  That said, the banks will not assent to having that data in the HMDA reports, and they declined to make it available to Cuomo.

Cuomo’s petition is here.  The attorneys represent the Clearinghouse Association have presented this brief.

Today, we will get a hint if this case is going to find traction.

President-elect Barack Obama nominated Shaun Donovan to lead the Department of Housing and Urban Development.  Obama named the appointment during Saturday’s Democratic Radio Address.

Donovan is currently the Commissioner of Housing Preservation and Development.  He formerly worked for Prudential.  He holds a graduate degree from Harvard and has authored articles at the University’s Joint Center for Housing Studies.

His experience in New York gives him ample time to understand how to run an organization with a large budget.  Obama praised Donovan for his work in developing an affordable housing plan for the City.

His experience has touched upon not just development, but also issues related to finance and zoning.  He has worked to help New Yorkers avoid subprime loans. The affordable housing plan includes incentives for developers to put affordable units in upscale development.

Donovan does not appear to have any experience with manufactured housing.  He is an eastern urbanite with a focus on preservation of housing.  Nonetheless, his credentials as a “houser” are excellent and speak well for his ability to revitalize HUD.  The agency has been wounded, following the resignation of Alphonso Jackson.

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Today is the last day to submit a comment to HUD about the nature of manufactured homes that qualify for insurance under FHA Title I and Title II programs.

The proposed new rule would remove the requirement that homes in the program have a permanent foundation.  This by itself is a promising and significant development, as it would extend the insurance program to many more homes.  However, the new rule adds a stipulation that homes must still be taxed as real property.  This limits the scope of the insurance program.

A second aspect of the proposed new rule is also worth challenging.  It states that any home that has been moved from its initial setting is automatically excluded from the program.  At a time when many land-lease communities are closing, this is a rule that seems unfair.

An example of a model draft of a comment is available here, from CFED.  This is a group that has worked for many years to address issues surrounding manufactured housing.

Comments can be submitted online at regulations.gov.  It is important to put the Rule Change in the heading — RE: Doc. No. FR–5075–P–01.

Who should be the new leader of the Department of Housing and Urban Development?  Will it be someone chosen because of their close ties to housing?  Will it be a political friend of the new President?  Will it be a person with some wherewithall in the field of manufactured housing?

The last situation would be a real stroke of luck.  Housing and Urban Development is a department with strong ties to the political traditions of America’s largest cities.  That makes sense, of course.

Jesse Jackson, Jr. is one figure who might be tapped to lead HUD.  Then again, Jackson might decide that he would prefer to run for the vacant Senate seat in Illinois.

What if the person was someone apart from the urban tradition, but simultaenously drawn to looking at a broader perspective surrounding housing and housing finance?

One possibility in this vein would be a leader from the Manufactured Housing Institute.  Would Ken Cashlin or Joe Stegmayer be an appropriate choice? Or, it could be someone chosen on the friendly suggestion of MHI.  But, will MHI be in the room when the decision is made to pick the leadership that will govern its business for the next few years?

The MHI appears to have prepared for the new tone in politics.  In 2008, slightly more than half of their giving went to Democratic candidates, according to CampaignMoney.com.  That is a big difference from 2004, when only about 35 percent went to Dems.  The Dems that they supported were logical choices — leaders on finance (Brad Miller, Paul Kanjorski, Barney Frank), heads of important committees (John Dingell, David Price, Charles Rangel) or from rural states (Max Baucus).

Still, it does not seem likely that they will be there.  They didn’t give any money to Obama, or for that matter, to McCain.  Maybe they aren’t worried about chasing leadership posts.