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FDL has obtained a copy of the letter written by Zoe Lofgren, Ellen Tauscher and Dennis Cardoza outlining major changes included the Lofgren-Tauscher-Cardoza second-degree amendment to H.R. 1106, Helping Families Save Their Homes Act (PDF):
Major changes made to H.R. 1106
During Committee consideration:
1. Judicial modifications were limited to existing loans.
2. A "clawback" provision was included to specify that increases in property values over the first four years of the bankruptcy plan would be returned to the lender, based on a sliding scale.
The manager’s amendment and second-degree Lofgren-Tauscher-Cardoza amendment made a number of additional changes, including:
- Ensuring that a judge considers whether a qualified loan modification that is consistent with President Obama’s plan was offered prior to considering a judicial modification
- Incorporating the Administration’s debt-to-income and interest rate limits as considerations for determining whether an interest rate reduction in lieu of a principal reduction is warranted.
- Changes to ensure that judges use FHA appraisal guidelines in determining the fair market value of a property;
- Improvements in the predictability of payouts by mandating that the debtor make equal monthly payments on their restructured debt;
- Specifications in the pre-filing requirement that in addition to a phone call requesting a loan modification, the debtor must certify that he or she provided information on income, expenses, and debts to the holder of the mortgage;
- Extending the pre-filing requirements to request a qualified loan modification from 15 days to 30 days to allow sufficient time for the loan modification process
- Changes to ensure that judges must deny judicial modification in cases where the debtor could otherwise afford the loan. This will prevent wealthy people from taking advantage or falling real estate prices;
- A GAO study to determine whether Chapter 13 proceedings are working to prevent foreclosures and the effect this is having on access to credit;
- Extending FHA, VA and rural housing assistance guarantees to adjustments as a result of judicial loan modifications.
- Amending the "clawback" provision to increase the amount of appreciation owed to the lender in the case of a home sale during the bankruptcy
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this is called death through obfuscation. What a crock of shit. I can guarantee you that language came directly from the banks. directly.
No. 6’s purpose is to allow the sheriff time to foreclose so that that loan-mod is rendered moot.
what a pack of assholes.
Whose language is this? Did Adam Pase write this for Tauscher? This is incredibly specific — bet it came right from the banksters.
Frauds, all of them.
Primary time.
Helping Families Save Their Homes ActHelping Banks Screw Us With Our Money Abetted by the Congresscritters on Their Payroll Act.I hope massacio breaks this down for us…. line by line.
Helping Banks Save their Homies Act.
how is that 3 representatives can call the shots?
Banksters rule the world…and Congress…and the Senate…and the political system… and the Treasury…and the IRS…and the Media…and you.
Me too. Just emailed him.
So the burden of seeking modification is entirely on the homeowner, right?
And if the homeowner is completely unable to reach the lender, which has inadequate staff to respond to the meltdown, or is even unable to determine who the current holder of the loan is…..then what?
The NewsHour was doing its own story on bankruptcy. It was talking about the future of the Republican party with Grover Norquist and Vin Weber (who worked on Mitt Romney’s campaign). Apparently Obama is a big spender and conservatives aren’t. It would be laughable how easily these two overlook the last 8 years but seriously with all the problems the nation has is this really the time or the place to be talking about a Republican resurgence with two apparatchiks.
I’ll gladly wait for the pro’s in this forum to wade in on this, but HS, my gut instinct is in line with your thoughts above. I don’t trust Tauscher, Cardoza or Lofgren on this . . . too blue doggy methinks, to really care for the sheeple’s needs. I smell banking lobbyist’s all over it . . . good to see you out and about HS . . *G*
ELLEN LEE TAUSCHER, THE PACHYDERM WHO SINGS LIKE A DONKEY
A STEALTH BANKER IN THE ARMPIT OF THE US HOUSE
KILLING OBAMA’S PLAN SOFTLY, IN COURTROOMS
NEW DEMOCRATS OLD REPUBLICANS
CREATING A SLAVE POPULATION TO BANKS IN AMERICA
AN OLD ACQUAINTICE OF A POWERFUL WOMAN SPEAKS OUT
It is ironic that President Obama’s desperately needed economic engine may have sugar thrown in its gas tank by the unannounced secret lobbyist for the banks which got us into this, Ellen Lee Tauscher. Though Ellen Lee now goes under the legal moniker Ellen Tauscher she remains the same Republican right wing money collector she was back when I knew her in the 80’s, a top level inside money raiser for Reaganites of every description, with ties to bankers at Citicorp who helped arrange loans for the soybean coffee company she ran for me at the time. Ellen has amassed a personal fortune since becoming a Democrat. She used our company’s money when she was a Republican, so I know she was not rich back then. At least I think she was a republican, I never saw her voting card. But she only seemed to know Republicans, except for my associates and me. Although I haven’t spoken publicly about it in all these years, I have come to see that keeping silent could make me part of a bad situation in America presently being made worse by the very people who put us in this hole. Ellen Lee Tauscher is a golden tongued woman who’s shown a black heart for the poor and struggling, for while amassing her millions she made it difficult or near impossible for the financially lost to get traditional help from bankruptcy courts. For years she has single-handedly spearheaded the move to re-write American bankruptcy laws debtors which today return credit card owners into the arms of their lenders for life, while requiring months of lectures on debt even as the homeowners and mothers and students need time to recoup, as the people once had with US bankruptcy laws before Ellen (lee) Tauscher started her crusade, wearing the mantle of the democratic party and her liberal Bay Area geography to hide her true origins and agenda. Ellen has the talent of an elephant who can sing like a donkey, but she still takes her lyrics from the old songs of Newt Gingrich and watch out for her derailment of the best of Obama’s plans, as her background as stockbroker and lobbyist and fundraiser for the Republican Party gives her a definite if devious advantage over almost every other seat in her House of Hidden Agendas. Ms. Tascher operates openly in cogressand among her constituents because she’s more quick witted than almost anyone else, and there are few financial experts anywhere who know how to zip around the data world of big money and high finance they way she does. Never mind her success for the banks has turned a financial failure for millions of ordinary people into a lifetime of bondage, and this may have been a match that lit the whole global meltdown. Who knows where it really started, our world wide economic stall, but we do know it has something to do with banks, and it’s banks where Ellen struts her stuff. But for whom? I just read this morning in the Huffington post an article by Jane Hamsher that Ellen is boasting how she’s killing a provision that would allow judges to help homeowners keep their residences, but killing with “blue” democrat helpers.
Ms. Lee Tauscher shouldn’t brag about her talents, which hurt only the poor and suffering, while Ellen herself has gone from zero to 300 mill in less than a decade. I know this woman, as she was my houseguest for 6 months back in 1986-1987. I am a private person, but it is hard for me to watch this and keep silent. Somebody should look into Ellen Lee’s background before she married Bill Tauscher and calculate her real politics. When Ellen Lee took over my company, called Incognito, she was an investment banker. A banker. In the House she remained a banker, openly working for bankers. What better way to help banks than to make it impossible for people to go bankrupt and free themselves of past debts as was envisioned by American judges for centuries. During her time in congress Ellen Tauscher wrote laws that changed lives for millions of people, workers and homeowners who went into court with hope for help from predatory creditors only to find when finished that they were now forever bound to pay money to those same credit card bankers, plus its interest. These people went bankrupt, so it’s not like they are holding out. And now she kicks out the crutches they once were given. Since Ms. Tauscher came to congress, when bankers throw the homeowners or the medically uninsured into bankruptcy they can be certain that if the person lives to work again, they will get their money. Whey then should bans worry if their customers go bankrupt? They’ll collect even more later on, after Mr. and Mrs. Smith get back on their feet – or collect a pension. Time is on their side. Credit banks can report debtors to the IRS as if the debtor’s loan was income. For years banks offered their money freely, like flowers; but now those who picked them discover they are sucked into a graveyard of debt. This doesn’t make for a free-spending group of consumers, but bankers don’t think like that. They take as much as they can as quick as they can, and it all sounds reasonable, like bankers are born to sound. Ellen Tauscher is a formidable force, but I am a democrat and I can say she is no democrat. Ellen can whip out her favorite masculine word “dickhead” and psychically/politically deftly castrate most men before they remember what a “dick” is, though thinking Dick Gingrich is a smart start. Ellen has done well up in trendy San Francisco, where nobody likes to talk about bankruptcy or going broke or “negative” things, and so with her brilliant counter-Madoff knowledge of banking and the stock market, Ellen has managed to make it really tough for the mortgage owner who goes to court seeking protection from bill collectors and wage garnishes because of medical bills, a person at the bottom but one who will no longer be able declare bankruptcy on the past but who will forever be in bondage to their credit card debts, as serfs of old were indentured to the landowners. Ellen managed to subvert the intention of bankruptcy law. Pretty bright woman, you must admit, no matter what you think of her accomplishments for her many suffering constituents. Under this congresswoman bankruptcy laws have caused a seismic shift in wealth from the poorest to the richest, making sure the bankers got their equity with interest and the poor credit card owner got a lifetime of misery. You can see that bankers themselves got billions out of both ends of this situation, first in huge profits and then in huge bailouts. But the poor guys too young for Medicare and too poor for insurance, who went bankrupt, are currently paying the kind of debts to the banks that the government is protecting the banks from. The Ellen Tauscher bankruptcy laws turned upside down the true intention of a bankruptcy court: to protect the debtor as well as the creditor. Mercilessly, Ellen has manipulated the systems – differently, but just as cleverly as the billionaire Madoff, who wasn’t caught by anybody but instead turned himself in for stealing millions from the rich. Ellen has no need for confession, since it is now law of the land that the millions in debt and interest from credit cards and banks and health insurers paying top dollar will remain stuck like knives in the backs of the poor and uninsured, even while most were enticed by slick advertising to get into debt to begin with. So millions of Americans of every rank and kind were suckered twice by the banks, first by bank-owned creditors promising ”easy” and even “free” credit –and then again by Ellen’s law forcing courts to become endless collector and enforced-lecturer to those once absolved and given a second chance by bankruptcy. Under Ellen’s blonde regime, Courts have become the prime enforcer and collector for the banks. So by changing the laws Ellen allowed banks to amass far more billions than Madoff, but from the poor. The banks in their various forms – Ellen is a banker – reaped the wind of the meltdown coming and going while Ellen trimmed the sails. By forcing people who turned to the bankruptcy court for help to mortgage their futures even as they lost their mortgages to the banks and their later-life pensions to the bank-owned credit card companies – millions more families fell into foreclosure and homelessness than would ever have done under the former laws. Somehow, in all of this, Ms. Tauscher has managed to appear as a “reformer” instead of a low blow sucker-puncher to the poor. And with congress and Pelosi’s acceptance of her “reforms,” Ellen grows bolder, for everything she does is legal and on the side of the bankers, and how could that be less than good value America? But I don’t buy it for a minute. Like that famous robber, Ellen hangs with the bankers because that’s where the money is. You don’t make millions on the payroll at the House of Representatives. Ellen’s choirgirl face and donkey disguise can’t conceal from my view the economic predator I remember. Ellen used to give lavish parties for Republican big spenders, her close male friend held the Citibank stock portfolio; these are not lurid secrets I’m revealing, but the solid underpinnings of a vivid past conservative banking political agenda I worry could impede our new President’s best efforts. “No Knight was ever so well on horseback he couldn’t be thrown down by inferior men,” wrote the ancient monk. Ellen is even more dangerous than any inferior person; she can cajole and threaten and she can spoil the barrel if allowed, at the heart of its empire: the money; the banks, and the ability of people in debt to fully recover in their lifetimes. I’m sure I’m only speculating when I imagine a clever woman knowing the stock market would decline if spending decreases and knowing stricter bankruptcy laws on credit card debt and health care debt would keep consumers fearful, and eventually cause them to over borrow and then default, pushing the stock market way down as the newly-enacted bankruptcy laws created more forecloses with less ability to spend which heated the “meltdown” and slashed stock prices which will shortly allow Ellen’s millions to be spent buying Tiffany at Wall Mart prices – and then, no doubt, switching from sucking vault to fertile Mother Earth, she will create new “reform laws” for people forced into bankruptcy suddenly allowing them to keep their homes and cars and even bank accounts and put down their debt as “uncollectible,” thus allowing huge climbs for the stock market and Ellen Tauscher’s portfolio. By investing her current cash into stocks when they become two-thirds down, Ellen could be a heroic billionaire when she re-writers the bankruptcy laws back to fairness again. Hey, I know it sounds like hyperbole, but momentous changes have taken place from the actions of just a few. We shall not forget Bear, Sterns. And Ellen belongs to an even bigger gang. One thing for sure: the old fairer bankruptcy laws should be restored and the wolves should no longer hide with the sheep. “New Democrats” are really “Old Republicans.” Ellen Tauscher is a Republican Ringer and undercover banker. Watch out. She shines real bright, but on the other side of the sun lays Pluto. I knew her way back when. I still wish her well. Sincerely, William Richert
yecch. I used to love the Newshour — not so much. I can rarely tolerate more than a few minutes of it now.
Still not sure if I got smarter or they shifted farther to the right. Once upon a time it seemed fairly liberal, seriously trying to get to the truth of stories…
Oh well. Sorry for the good-ol-days nostalgia.
If he has time. It looks to me as if written specifically to be hurled across the room before the reader gets halfway. Finishing it could be like interval training.
In other Tauscher news, I’m sure many will be interested to know that today she also called for the repeal of DADT in the military. (Do I really need an emoticon here?)
A lot of these changes were already in the rule that they voted for last Wednesday night:
http://www.congressmatters.com…..48/299/728
The scandal here is that this is three dems who are saying this is a compromise. Who are they compromising with? If they get these modifications are they suggesting this bill will get broad rethug support. I doubt it. So once again, we give up principle (and justice) for nothing.
I agree with Teddy that we have to start looking at primary challenges even if they are likely to fail. At the least they send a message and sometimes we are pleasantly surprised.
Anyone who spent every day watching CNBC (retirees) would seriously believe that Obama caused the economic crisis. The disinformation (coverup) is relentless. There isn’t ANYONE who could save the economy…yet their happy to blame Obama.
Why is Madoff not in jail? What about Stanford? Rove? Rumsfeld? Wolfowitz? Pearle? Cheney? Zakheim? Alexander? Rhode? Feith? Fleischer?
Why is it that NOBODY involved in the lies that led to war, allowing 9/11 to happen, or destroying the entire global economic system, is in jail?
The question answers itself.
They did it all on purpose.
You only THINK they are trying to fix it or give a shit about you.
They don’t.
Not real sure what you are trying to say there as it is too difficult for these old eyes to penetrate.
But if it is that important, please consider writing a diary at Oxdown
Among this pro-bank drivel is item 5, making it a requirement that the debtor have provided his or her lender essential financial information. That assumes, for example, that the lender actually asked for it in the first place.
It completely ignores an entire segment of no questions asked loans, in which lenders “purchased” higher interest rates in exchange for NOT asking debtors whether they could pay off the underlying loan. That such a category of housing loans (the biggest most debtors ever take out) exists is pretty damning evidence that lenders knowingly and intentionally took risk outside the normal course of business, never expected to be repaid, and were peddling junk to the securities markets.
I don’t see how any loans in that segment deserve repayment, much less to be immune from a revivified cram-down provision.
OT – groan… here we go….
from TPM
Coleman Lawyer Floats New Possibility To Judges: Throwing Out The Election
Perhaps I am missing something — maybe it’s the banksters assumption that Congress will continue to socialize their losses and privatize their profits — but what the hell are all of these failing banks planning to do with the foreclosed properties they will end up with?
Since Congress and the President haven’t shown the slightest interest (so far, at least) in helping create a living wage for the average tax payer, who do they think is going to buy these properties, especially given that they aren’t going to sell them at current fair market value? There can’t be that many bazillionaires left who are willing to sink their extra cash into flipping; no one can be that stupid, can they?
After the Bush interregnum I became convinced that there was little left that could or would ignite the American public to rise up and demand fair representation and justice in Washington but I have an inkling that seeing their friends, neighbors, coworkers, relatives, and maybe even themselves join the ranks of the homeless, the destitute, and the hopeless just might do the trick.
The republic party is screeching about their tea bag “revolution” but it seems far more likely to me that the anti-bank revolution is far more likely are will be far more ugly politically. These conservative Dems won’t have a prayer in 2010 if they keep on running interference for the bazillionaire gamblers and the heinous banks who have caused (and keep causing) so much grief for the working American voter.
Take the time to carefully read and study post #12. Copy/paste and reformat in WORD – whatever you have to do, but take the time to read it.
I will not watch ot at all anymore. But I suspect for the both of us it has to do with our improved knowledge (FDL et al).
Remembering one example: I used to remain calm when Phil Gramm owned that program… all the while he was insuring we would end up where we are financially (see main post) today.
(delurks) this has been in the wind for a while; St. Paul Pioneer Press pushed for this a few weeks ago; desperate people . . . (relurks)
This smacks of the deceptive practices used by the insurance industry to deny paying claims that MIchael Moore revealed in Sicko. If you forget one thing, leave one thing out, or have some ridiculous something in your past that they can call a “pre-existing” condition, even if no sane doctor would agree, then you are shit out of luck. And they make sure the forms are impossible to fill out. Disgusting, disturbing, deceitful . . . . Business as usual, in other words.
If the present debt that’s all that resold debt, resold over and over till the house fell, if that debt is never ACCURATELY valued (mark to market is the phrase you Pups in here have taught me), along with newer failing debt on the books, if it’s never accurately valued, then . . . what happens?
Do the bankers think they can take free money, pay off their own folks with bonusing, stall out and stall off REAL restructuring to include re-regulations, the likes of Glass-Steagall, separation of banks from brokers, etc., do they think they can at some point sooner than later, resume RESELLING ALL THAT BAD DEBT TO REPEAT THE HOUSE OF CARDS TRICK AGAIN?
Does ANYONE in the ruling 1% not get that the curtain’s been pulled back, we see them? Or do they really think they can control the increasingly disgruntled and disadvantaged middle and lower classes?
Or is this all the slow dance to the change we voted for? And it’s painfully and agonizingly slow . . . . but we’re maybe, on a new path(s) with our elected officials?
I almost need to tag /snark after that last line of mine . . I’m sure not sure of much, desperately hopeful, sure. But I’d be desperately hopeful anyways after 40 years of this crap . . . ;-)
I find it interesting that of 10 provisions 3 deal with ways to avoid cramdowns:
In 2, you have to remember that the homeowners covered by this plan are really only moderately distressed. At worst, they are only minimally upside down on their mortgage. So the likelihood of a cramdown is lessened to start with and further reduced by passing them first through this filter whereby interest rate and payment options are exhausted first.
3 basically ignores that housing prices continue to fall. A cramdown could in fact adjust the mortgage to where the bottom is likely to be. Doing it this way, inflates the value of the property because it is using an appraisal that does not reflect this bottom.
7 Limits can be placed on the program but the problem here is that as we go deeper into depression people who are good on their mortgages now but are a job loss away from going under are kept out of the program and so can’t maximize the benefit that a reduction in loan principle would give them. So they can get clobbered by the economy later but in the meantime the benefit of keeping them out of the program will accrue to the bank.
These 3 terms are very bank friendly and very screw the borrower oriented.
Hmmm. I read that as meaning the essential info had to be provided in applying for the “Obama plan” prior to filing bankruptcy. It follows the requirement that the filer demonstrate a request for a modification.
Your interpretation would, of course, be completely outrageous – but hardly shocking anymore.
New post:
Correcting the Confused al-Haramain Reporting
The first item #2 would allow banks to reap capital appreciation in a home for four years, instead the cram-down provision’s requiring them to accept the fair market value of the home at the time of forced refinancing in bankruptcy.
That’s really a claw-back provision that negates the original cram-down. Four years ago Wall Street was telling us it was fine. Bush was telling us he would win in Iraq (and that we should privatize Social Security). GM said it was healthy. And many jobs hadn’t yet been outsourced forever. Some marriages don’t last that long; health insurance contracts last a year and auto insurance contracts typically six months.
If a family can hang together, keep jobs, health, marriage and kids intact, can keep their house for four years, and can keep commitments revised by the bankruptcy court, the uptick, if any, in their house’s value should be theirs.
Adopting this provision would be dancing the Republican two-step: one step forward, two steps back.
There’s plenty to be disgusted about, no question – but I’m afraid the earl read that one a little too fast. See #27, and read that line in the post again.
Sorry but if it is important enough for me to read, it is important enough for the person presenting it to me to make it readable.
If you can’t take the time to present something to me in a style in which I can read it and comprehend the information, why should I take the time to wade through it?
Too true.
From time immemorial (or since we’ve had banks), banks will always get theirs. Or what they think is theirs.
As a person who has a great deal of experience in these sort of things I find these changes to be reasonable.
Exactly where is the injustice in these 10 changes?
The information here allows both interpretations. Banks, predictably, would argue for the one favoring them. But as comment no. 25 said, it could create an administrative reason to deny an otherwise eligible debtor the benefit of a cram-down, which is what all these provisions are meant to do.
I don’t see much here that suggests Democrats are fighting very hard to help working families keep their homes. That this to be an internal debate among Democrats would be laughable if it weren’t so tragic.
Every substantive provision described in the post is designed to make it harder to get to modification, increase the cost and delay the outcome. That said, if Debtors can wait it out and get a good lawyer, eventually they will get a good deal. The cost of their lawyer is usually paid out over the term of the Chapter 13 Plan, so once again, the efforts of bankers result in more income for my profession.
I’ll add more later.
There was some question about that the other day — I read it the same as you, I think they mean during the Obama program.
Ooh, so glad you said that.
You’ll notice some of us (*g) try to use lots of white space to make it easy to read.
I, too, just skip on by long dense graphs like that.
Like some of my grade school grammar teachers used to say, if you can’t explain your point clearly, you don’t understand it yourself. (paraphrasing several old dears)
Exactly.
All the while the sheriff is standing on your lawn.
Truth doesn’t care about style, it just is.
If you don’t want to know the truth, don’t take the time to read it, or thank him, regardless of the style.
I hope that’s correct. Any other way would be outrageous…but then, we are so very used to being outraged…
A plain English reading, noting which parts of the sentence modify other parts should make it simple — but even legislators and their staff can’t be trusted on that, either.
And earl, I don’t disagree with the last part of your last post. At all.
Kagro had an interesting post this weekend… one part projecting increasing numbers of foreclosures for the next four years.
How on earth these congresscritters expect anyone to believe current price levels are anywhere near bottoming out is beyond me.
Massacio, it looks pretty much like the stuff that was already incorporated into the first amendment made in order by the rule, that was to be offered by Chairman Conyers, per Kagro. They voted for it last Wednesday night. You went over most of this at Oxdown — Am I reading this right? They really didn’t change much:
http://www.congressmatters.com…..48/299/728
1. Conyers, John(MI):
(REVISED) The amendment would (1) require courts to use FHA appraisal guidelines where the fair market value of a home is in dispute; (2) deny relief to individuals who can afford to repay their mortgages without judicial mortgage modification; and (3) extend the negotiation period from 15 to 30 days, requiring the debtor to certify that he or she contacted the lender, provided the lender with income, expense and debt statements, and that there was a process for the borrower and lender to seek to reach agreement on a qualified loan modification. It also would require a GAO study regarding the effectiveness of mortgage modifications outside of bankruptcy and judicial modifications, whether there should be a sunset, the impact of the amendment on bankruptcy courts, whether relief should be limited to certain types of homeowners. The GAO must analyze how bankruptcy judges restructure mortgages, including the number of judges disciplined as a result of actions taken to restore mortgages. The Amendment would clarify that loan modifications, workout plans or other loss mitigation plans are eligible for the servicer safe harbor. Requires HUD to receive public input before implementing certain FHA approval provisions. With respect to the HOPE for Homeowners Program: recasts the prohibition against having committed fraud over the last 10 years from a freestanding prohibition to a borrower certification. Would amend the National Housing Act to broaden eligibility for Home Equity Conversion Mortgage (HECM) or “reverse mortgage.” Would provide that the GAO must submit to Congress a review of the effects of the judicial modification program. Would require the Comptroller of Currency, in coordination with the Director of Thrift Supervision, to submit reports to Congress on the volume of mortgage modifications and issue modification data collection and reporting requirements. Would express the Sense of Congress that the Treasury Secretary should use amounts made available under the Act to purchase mortgage revenue bonds for single-family housing. Would express the Sense of Congress that financial institutions should not foreclose on any principal homeowner until the loan modification programs included in H.R. 1106 and the President’s foreclosure plan are implemented and deemed operational by the Treasury and HUD Secretaries. Would establish a Justice Department Nationwide Mortgage Fraud Task Force to coordinate anti-mortgage fraud efforts. Would provide that the Treasury Secretary shall provide that the limit on the maximum original principal obligation of a mortgage that may be modified using EESA funds shall not be less than the dollar limit on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation that is in effect at the time the mortgage is modified.
Perhaps I’m too mistrustful but isn’t the whole point of this massive failure attributed to the fact that mortgages were bought and sold like hot dogs on a New York City street corner? If your mortgage has changed hands multiple times couldn’t this particular change allow the current holder to declare that you hadn’t shared financial information with them since you’ve never actually done business with them, filled out any forms for them, and probably not even talked to them?
Isn’t that how the squatters up north are staying in their homes, by demanding that the current owner of their mortgage produce paperwork which they don’t have (and never had)? I admit I’m not expert on this issue but I am quite experienced with covert legislators poisoning legislation with subtle rhetoric like this that their owners have carefully vetted with their attorneys and planned to use in future. Call me a cynic….
BTW, these were masaccio’s comments at the time:
http://oxdown.firedoglake.com/…..ment-32370
1.
2.
3. I think my post makes it clear that this is just silly.
4. This isn’t a problem
1) Clawback (shared appreciation) – Increase in the percentage for the 1st 5 years
Increasing the clawback is a tricky problem. Who is the money going to, and how do you get them involved in a closing? How do you value the potential clawback in calculating the value of securitized mortgages? Doesn’t it encourage the Debtor to stay in the house instead of selling it, and is that a good idea?
2) Improvements to mitigate the effect of the legislation on FHA insured and VA guaranteed loans
This is a complicated problem. On balance, I think it may be ok.
3) Ensure that judges use FHA appraisal guidelines in determining the fair market value of the property rather than on an ad hoc basis
I think my post makes it clear this is silly.
4) Mandate that the debtor make equal monthly payments when restructuring debt (predictability in payouts)
This is ok.
5) Specify that in addition to a phone call requesting a loan modification, the debtor must certify that he/she provided income, expenses, and debt to the holder of the mortgage.
This is worrisome. How in the world is the family going to do this? It looks like you need a lawyer just to start the process with the lender. I also think this may be used as an tool to check into whether the bank can say the loan was fraudulent at the outset, and use that to stop the bankruptcy, maybe by arguing that the filing is in bad faith.
6) Judge must deny judicial modification in cases where the debtor can afford the loan. The loan has to be unaffordable and not just underwater, which prevents wealthy people from taking advantage of falling real estate prices.
This is not a problem, either way. This just isn’t going to happen for all kinds of reasons.
7) Ensure the debtor receives credit counseling, which can occur after filing bankruptcy, but has to happen before the judge approves the workout plan.
This is already in the Bankruptcy Code, unless they want some special counseling. If so, I want lenders to undergo counseling too.
8) A GAO study to see whether this is working and the effect it could have on debtors, access to credit, etc.
Who cares?
9) Make sure that a judge considers whether a qualified loan modification was offered. The definition of a qualified loan modification is kicked to the Administration and the regulators.
This is a pathetic idea. The financial industry will negotiate and lobby until this provision can be used to destroy the effectiveness of the bill.
10) Extend the pre-filing requirement to request a modification from 15 days to 30 days.
Why? Servicers don’t have authority to do anything when the loan has been securitized. Once the process is underway the sooner it stops the running of the new lower interest rate, the better for the Debtor. It gives the industry the ability to inflict more fees on the Debtor.
One thing everyone needs to remember is for loans that are under water, the last thing the banks want to do is foreclose. If you believe otherwise, you haven’t been in the foreclosure wars.
This fact is going to be of great benefit to the home owners in the restructurng process.
For these provisions to be reasonable, one has to give banks interest priority over all others, the interests of debtors, the court’s need for ease of administration, society’s need to allow a fresh start as from a date certain with the ultimate objective of returning a failing person or family to health, allowing them in the end to contribute more to society.
Bankruptcy laws exist as an alternative to Victorian poor laws and debtors’ prisons, which considered not paying debts a mortal sin almost as great as insulting the Queen or reneging on a gambling debt at one’s Pall Mall club.
Corporations skip on their just debts all the time. It’s a cost of doing business and an “inevitable consequence” of encouraging private enterprise and entrepreneurship. A successor company owned by the same people is not ordinarily liable for its predecessor’s debts, even if it carries on the same or a similar business.
The law could, of course, deem a corporation’s debts to be the debts of its shareholders. AIG and GM’s creditors would appreciate that, though I hear no one inside the Beltway clamoring for that. The law – the people acting through their legislature – doesn’t make that choice. It’s a political choice based on social and economic values.
So too, individuals in extremis should be allowed a fresh start based on their circumstances as of the time they enter bankruptcy. Not two or three or four years down the road. After all, it’s not personal, Sonny, it’s business.
I’m disappointed seeing Zoe Lofgren’s name on this. In the past, she’s been much more of a progressive than Tauscher.
But all these restrictions on “judicial modification” seem to mean that homeowners will continue to be treated worse than house-flippers, speculators, and businesses that own property. There are already many provisions in bankruptcy law to assure that the debtor can’t cheat the creditors.
They reeeealy don’t want to reduce the principal, do they. That BusinessWeek article mentioned that if they start adjusting the value of a particular loan, they have to start reducing the value of all similar loans:
http://www.businessweek.com/pr…..085635.htm
If this is the only major proviso that has been added, I would really like to see somebody argue with a straight face that this was done on behalf of the leeettle people to help them avoid the tragedy of bankruptcy.
Clawbacks aren’t going to be that hard to administer. They have been used for a long time in subsidized FmHA loans. The closings where the clawbacks are in play, are only marginally more complicated.
The depression is in its early stages. Ivy League Wall Street types and Big Ten engineers at GM are being let go in droves. I would be surprised if there were not many more foreclosures and bankruptcies ahead of us.
This fight over bankruptcy reform involves one-hell-of-a-lot-of-money. I expect it to be fierce; but I expect a fight, not a handshake behind the bar.
They appear to be asking the mercun pipple to use poison oak in place of charmin.
not specifically about housing prices, but you should have heard senator whitehouse today at the senate budget committee hearing (bernanke). it was painfully embarrassing how ignorant he sounded. like maybe he’d spent 3 minutes reading some talking points and zero minutes thinking about them. it seriously hurt to listen to him.
I agree we are still well away from a bottom. Those numbers make me wonder how many of the 9 million that Obama is talking about would be covered by his program.
oldgold,
IIRC Obama’s program only covers upside down loans where the mortgage is 105% of the property value. So we aren’t talking really underwater stuff here.
great catch.
I should have said how many of the 9 million in Obama’s plan overlap with those in the charts (which the footnote says I think were done by Credit Suisse).
I think that’s right. Banks don’t want to foreclose because they deal in paper, not property. They want to lend on property, not own it. They don’t want to wrestle with the problems of outright ownership: repossession; maintenance and repair or condemnation; environmental claims and workmen’s liens; resale.
Banks want to delay bankruptcy filings too. Delays outside of bankruptcy quickly lead to more and higher fees.
But the new system Wall Street bequeaths us makes it almost impossible to determine who owns the mortgage debt. Most mortgages have been sliced and diced into so many bits that lots of people “own” only a portion of it. Which makes finding someone who can renegotiate debt a huge obstacle. The next obstacle is finding a bureaucrat with authority and the will to renegotiate reasonable terms. Good luck with that one.
Rational bankruptcy reform is the fastest way to resolve some of these problems. Pragmatically, it avoids the need to find that lender’s bureaucrat and relieves him or her of the need to make major decisions. Cram-down would require the lenders to accept a revised value for their debt by force of law. That’s what scares the pants off the industry; this would strip several more planks off that barrel they already wear instead of an Armani suit.
That is a good argument for my position that cramdowns should be done across the board within a local market and so on across the country.
As a link that selise had for Krugman today or as Dean Baker has been saying, all of this is kabuki to hide the fact that banks are insolvent and to become solvent they are demanding that their crap assets be purchased for more than they are worth. This is the place we keep coming back to. In this plan, it is the homeowner who has a mortgage for more than the home is worth being asked to refinance with another mortgage for more than the home is worth.
At 105% or anything close, in a foreclosure setting they are way underwater. In a foreclosure the financial institution can expect to kiss in excess of 25% of the value of the asset goodbye.
bernanke said today that there no insolvent large financial institutions.
It does seem that way, doesn’t it?
Oh love this:
Who brags about being tools of the bank lobbyists? Huh? And then calls me up and claims they never did anything of the sort?
I can read.
Type-I versus type-II error for you statistical types. For the rest of us it is question of how many false positives you are ready to accept to avoid illness. This is set up to avoid the false positives of someone getting a better break from the government than they deserve, unlike AIG or Citicorp, just to make the point. It is part of the same DC philosophy that the publlic are always trying to rip off the government, so we should limit their access to its largess, unlike, may I add, Citicorp, AIG, Bank of Amerida.
Oh, nevermind. Sorry I brought it up.
Now how much would you pay:
So let me get this straight — plaugued with concern about “people struggling to pay their mortgages,” the “moderates” decided to join together with the banking lobby.
Does that make sense to anyone? Anyone?
Jane Hamsher: “Rep Tauscher please”
Aide: “May I ask who’s calling?”
Jane: “Jane Hamsher”
Aide: “And what is this in reference to?”
Jane: “I want to tell her that she can stop trying to blow smoke up my a** and that I can read her positions in the Banking Lobbyists newsletters so there’s no need to try to keep lying to me”
As you review this plan, you need to consider the other people in the subdivision who are paying their mortgage. If you make this plan too sweet, the blow-back might be overwhelming. In the restructuring plans during the farm crisis this became a real problem on the ground and politically.
Of course, those who are paying wil accept some assistance for others, since a foreclosure hurts the value of their home, but if it is too much -
watch out!
Here we have some honesty:
Looks like nobody told Maxine that the bankers were just trying to help “people struggling to pay their morgtages.” (There’s a syllogistic logic FAIL in this article that is making my head hurt.)
Dude, do you work for the NSA or something?
If I thought that was what was driving this I would be sympathetic, but I think that is the excuse they are using to make modifications that make the banks comfortable.
Countrywide Financial’s, a top predatory lender, former top executives, good entrepreneurs that they are, have going a busy new private business: buying up defunct mortgages, often for pennies on the dollar. No wonder banks are lobbying to have their loans repaid at face value, without benefit of a cram-down.
Fool me once, shame on you, fool..twice..you can’t get fooled again.
My response is:
learn to use paragraphs and white space, or see a lot of answers that read ‘tl;dr’.
Not even.
Just manage to pay attention to how some folks might deal with teh stoopid they encounter on Capital Hill.
:})
it’s what we’ve been hearing since sept 2008: we’ve got to give the banksters lots of money so that they can save the economy and the rest of us.
or something. maybe i’m just not smart enough to get it
gimme a break, sometimes we outta go to the bios first.
ellen schmellen.
brought up in labor, went to the dark side at an early age.
investment banker with Bache & Co. and, at age 25, became a member of the New York Stock Exchange. She also served as an officer of the American Stock Exchange from 1979 to 1983, after which she worked for Bear Stearns and a subsidiary of Drexel Burnham Lambert.[2 .
http://en.wikipedia.org/wiki/Ellen_Tauscher
chaired feinstein’s campaigns in the 90’s, dates have to be wrong on the wiki. says 92 and 94 senate campaigns. according to her committees, she’s flying under the radar for banking, wonder why they haven’t used her there, oh wait, she can use that in the many committees she’s on as a backup. no public money ties influence, except for her former husband, republican money manager.
wonder what feinstein thinks of her now. oh, wait.
am trying to find my bookmark for money according to district. may take a while……
sander o i left you a viewpoint about all of this in the last thread, #33…
so we go with hugh’s plan for across the board cramdowns in a market.
add in a little honest progressive populism about the banking fraud…. do you still think that won’t work for voters?
Feinstein was first elected in ‘92 in a special election after Pete Wilson had resigned to become Governor then won the full term in ‘94
http://www.fedspending.org/fpd…..p_cd2=CA10
federal spending in ellen schmellen’s district…..check out the difference in names and numbers between 2007 and 2008…some changin’ goin on.
this is a site that can provide all kinds of info, click to expand a column, reset upper right categories for year and other data, reset on the left to rest info, too…and the grants categories are always revealing.
No, I am not for across the board cramdowns.
Why would we give assistance to folks who can
afford to pay what they agreed to pay?
one of my favorite ‘in general’ research sites. lots of meat, sometimes can’t pursue all i find there.
oh ok, thanks, just noticed the disparate dates, didn’t know why.
Boy did TPM get fed some horseshit by Tauscher’s office:
If your source is Tauscher’s press flack Jonathan Kaplan (who sent it to me, just so I’d know he was her source), and you didn’t know that the New Dems were fighting to limit cramdown to sub-prime, I suppose it’s an easy mistake to make.
But the fact that Citi agreed to cramdown in January and it was BofA and JP Morgan who objected is common knowledge and in print in many places. It’s kind of sad that anyone would even write that. She should probably go back and ask the guy if she can at least print his name if he’s sending it around with pride.
it started when their big sponsor went away…then they changed the set, then they changed some of the (fill in answer here)
i wrote many letters to them at each incremental fall off of the cliff.
asking them to take a stand or define what it is they are doing in the name of ‘news’. to compare what they had been providing to what they do now. compared them to charlie rose who has already gone down the road a long time ago and diane rehm who seems to be going down the same road. not researching their ‘experts’ backgrounds, not having good researchers doing background on their guests, presenting/misrepresenting an individual that shouldn’t have air time to begin with….all kinds of things that to me are inexcusable. for some reason they aren’t/can’t doing anything to change the stream. i’ve noticed how bored/uncomfortable some of them appear to be.
waiting for lehrer and others to say ’see ya’….but they seem complacent to hang in there, or like how it is, don’t know which.
What remedy predicated on declaring personal bankruptcy (and chapter 13, where you’re more or less indentured at that) is “sweet?”
I should think that a person who’s able to avoid the whole thing might be able to persuade themselves that it’s not such a bad trade.
not while he has the checkbook there aren’t.
Reminds me of having read somewhere that in the wake of our last mortgage fiasco a couple of the main perpetrators turned up almost immediately in the mortgage brokering business, this back in around 1990 or so. I was never able to track them down to see where they wound up.
he used to.
lol.
Because the whole market is out of whack and needs to be adjusted to bring it back into some kind of coherence. This gets back to the idea that those who made bad deals should be helped but not rewarded relative to those who assumed more traditional levels of risk in their mortgages.
exactly.
Actually, I have been involved in a good number of what turned out to be sweet debt restructurings in and out of bankruptcy.
For instance, twenty years ago I was involved in writing down loans on farms from $3000/acre to $1000/acre that this year sold for $6000/acre.
I was presuming that there was some personal experience of the bankruptcy that explained why people don’t just rush to do it in the first place, not just looking at numbers.
there’s something else that is true for where i live and i expect it is the case in other areas. people who bought homes just before the crash are in the most trouble, those of us who bought homes a few years before are ok because we have some of the run up in prices to cushion the blow. but someone could have put 20% percent down and not taken on a lot of debt and still be in very big trouble if they bought at or just before the peak. it’s not necessarily their fault if they get laid off and work is hard to come by locally but they can’t move because their house is now worth much less than their mortgage.
to a large degree it may be that who is in trouble has a lot to do with just bad luck re timing.
I agree.
It looks like the key difference is that the provision regarding VA and FHA insured loans is not in the mix for in the Conyers. Here is the explanation of this issue from the Mortgage Bankers Association:
I didn’t quote their conclusion because it is a just wrong.
Anyway, it doesn’t look like the Tauscher amendment covers this problem. It merely says that the VA and FHA will continue to guarantee the modified mortgage. Of course, we need to see the final language.
“I don’t think people ought to have to go through that mess” to get mortgage relief in bankruptcy courts, Waters said. She said the banking industry still has a stranglehold on Congress. “These guys rule this place,” Waters said.
Bless Maxine Waters for telling it like it is and cuttin thru the crap.
Nice read Mz. H, thanks for sharing that one in your #62 . . .
Looks like the econ Pups in here have fleshed out this one for the most part.
Just another Steely Dan Royal Scam enabled by bought and paid for pols.
As some Pup above said, it’s a long fight . . . if they haven’t already done the handshake at the bar. (roughly paraphrased to make MY point)
I don’t recall a lot of small farms saved during THAT crisis . . . . I wonder if oldgold does . . . . the crisis was there WERE small farmers . . . . being squeezed by Monsanto and big agra . . . .
Home owners paying their mortgages are NOT the issue here . . . . and they won’t be the issue unless Repubs cull a few out and make them spokespeople . . . bet there’s not a professional plumber among them when they DO show up in the MSM . . .
Here’s something else that doesn’t show up on the Tauscher list:
I haven’t seen anything about this, I wonder if it was to block suits like the one William Frey filed.
This is how:
These are the people who didn’t want ANY stimulus and are now freaking out over the budget.
And look at this:
That’s just an insult to every single Bankruptcy Judge. I don’t remember anyone ever being disciplined for a decision in a case of any kind.
One more thing: these changes will hurt the people most in need, low information homeowners. They procrastinate, and may well lose a home they could have kept if they had started earlier.
I remember them very well. I was personally involved in restructuring the debt of scores of small farmers.
I am all for helping people stay in their homes and support this legislation. I am sorry if I have offended people by offering some insights based on my hands on experience in this area.
I agree with this point.
that’s the senate, not the house.
And just think, she’s only one of 565….
Can you write up a post about the changes since Conyers, masaccio? We’d love to run it in prime time in the am.
Does anyone know of any widely-read public forum that might accept the narrative of “WilliamRichert”? Perhaps the best way to get at Tauscher and her cronies is to publically humiliate them. Maybe get one of the cable channels to pick up the story? Some publicity to put that hag on the spot. Make her explain her way out of it. It certainly couldn’t hurt.
Here’s the text of the amendments.
First, Conyers’ amendment, which was the first round of concessions:
http://www.rules.house.gov/111…..hr1106.pdf
And this is Tauscher’s amendment to the Conyers amendment:
http://www.rules.house.gov/111….._amnd1.pdf
Text of the underlying bill:
http://docs.house.gov/rules/111_hr_housing.pdf
That’s a power the GOP-led Congress has lusted after for some time: the ability to “discipline” federal judges whose decisions they disapprove of, a kind of vetting not just of judges, but their decisions, too.
A lawyer’s whose read her Constitution might detect a small problem there.
Another solid voice for individuals and families is bankruptcy law expert and consumer advocate Elizabeth Warren of Harvard. She is chairing the oversight board for TARP. She sometimes blogs at TPM, but would be a wonderful guest speaker at FDL.
Rachel Maddow said last night that Elizabeth Warren has a standing, open invitation to visit. She has been on 3 times already I believe. And she has been great.
selise at 91 and part of the problem, too, is that upkeep is coming due for a lot of these homeowners, and they don[’t have income and they can’t get an equity loan because in the drop in value…and others who paid off their mortgages thinking they could just get a second mortgage or equity loan at a good rate to do the upkeep and now can’t, those people aren’t even being mentioned. they are watching their houses fall down around them or are scraping by to do maintenance they thought they could cover….a whole lot of people are suffering in this manner that i know of.
With respect to
5) Specify that in addition to a phone call requesting a loan modification, the debtor must certify that he/she provided income, expenses, and debt to the holder of the mortgage.
I am in the process of trying to get a loan modification, and the phone call and provision of information to the holder of the mortgage describes exactly the first two-steps I’ve followed to initiate this process. If the borrower has really been able to reach the lender, this requirement shouldn’t be confusing to them, nor should it be difficult to carry-out.
Slightly off-topic, someone I know just got a very good modification from Washington Mutual in less than 5-days. So they are doing modifications for some people. I think this is a fairly recent development. I live in the Silicon Valley.
I think the HOPE program Dodd & Frank created expected a writedown of 15-20% or thereabouts. Over time no lenders took advantage, so now they get to lose even more. Idiots.
BTW, the idea that accounting rules would make them mark-down the value of an entire class of mbs assets is news to me. Today is the very first day I’ve ever heard of that.
Is it law?
Is there no exception for individual mortgages going through bankruptcy?
This seems very unlikely to me since there have always been bankruptcies and presumably some kind of mortgage issues.
If it is law then it might be wise to change that, so banks can get on with modifications and so bankruptcy courts can modify some without all the others being destroyed.
I suppose I’m tending to read the Tauscher changes with a bit less fear than the other bloggers here. The way I see it the final language is where the Devil resides and some of these changes might be horrendous or negligible depending upon how they’re written up.