Mortgage Crisis: Legislation You Should Support

Last week, the Senate leadership introduced the Foreclosure Prevention Act of 2008. It is S. 2636 in congressional jargon. The legislation would be a leap forward in the government’s efforts to mitigate the foreclosure and credit crisis sweeping the country.

The bill incorporates pending proposals that would allow bankruptcy courts to modify mortgages in Chapter 13 cases so homeowners have a fair chance to save their homes while their lenders get repaid a fair price for their loan in lieu of having to foreclose and resell homes. We have discussed those proposals many times, including here, here, and here.

My friend Jill Michaux has outlined this bill in more detail and I encourage you to review her post. The Bottom-line: It moves past the voluntary industry-driven programs that are not working, mostly benefit lawyers, are contractually limited, or just wishful thinking.

While this legislation may actually end up with more than 50 Senators supporting it, Senate rules virtually demand that more than 60 votes be in favor in order to overcome potential filibusters.

How many Senators will filibuster legislation designed to stem the tide of foreclosures and to keep constituents in their homes? Interesting question. While only 1/3rd of Senators answer to the voters this year, the majority are Republicans who have seen their popularity dwindle in the last couple years. Others think they can afford to listen to their large credit industry contributors instead. This is particularly true when politicians don’t believe their constituents care enough about an issue to hold a grudge.

Susanne Robicsek posted a letter here to support a related House bill and I would suggest everyone who is willing to support S. 2636 contact their Senators immediately. You can find and contact your Senators here (e-mail is faster and easier than snail mail). Tell them you care and tell them you will remember!

Remember: You have a voice and a vote. If you use them and force the Senate to listen, hundreds of thousands of homes may be saved.