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.