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House Judiciary Committee Democrats announced Tuesday they had struck a deal with a Republican panel member on a bill that seeks to address the housing foreclosure crisis.
A markup on the compromise between Judiciary Chairman John Conyers Jr. (D-Mich.) and Rep. Steve Chabot (R-Ohio) will be held Wednesday.
The new bill would apply only to debtors who file for Chapter 13 bankruptcy and lack the income to pay their expenses.
Through the bill they would have the option to reduce their high mortgage rate, modify the principal amount of the mortgage to reflect the home’s value and “set aside” additional fees assessed by mortgage lenders.
“This bipartisan compromise assists a broad category of homeowners who would not otherwise benefit from the administration’s proposal, namely those homeowners who most need assistance and are facing foreclosure,” Conyers said in a release Tuesday.
Chabot last week said in an interview that he was cautiously optimistic that they would have the votes to pass the bill through the House. “The goal is to help as many people in their homes as possible,” Chabot said.
Chabot survived the Democratic wave of 2006, but he is expected to face another tough reelection race this cycle.
The revised legislation targets only interest-only bills and sub-prime mortgages granted after Jan. 1, 2000 through the date of enactment, according to a committee summary of the legislation.
Senate Majority Whip Dick Durbin (D-Ill.) has introduced similar legislation in the upper chamber.
GOP opposition to the Democratic measure is rooted in the concern that banks may begin to take losses due to the scaling-back of interest rates, possibly triggering a chilling effect leading to fewer low-income people being granted loans in the future.
The bill differs from the recent compromise struck between Treasury Secretary Henry Paulson, which simply freezes interest rates for homeowners with financial difficulties and refinances them if necessary. This would temporarily protect homeowners in danger of foreclosure from interest rates that could rise from 7 percent to as much as 11 percent in 2008.
House Financial Services Committee Chairman Barney Frank (D-Mass.) made progress on the issue earlier this month. His bill, which passed the House by a large margin, seeks to give federal banking regulators the ability to write new rules to prohibit deceptive financial practices by mortgage lenders. Sub-prime loans are manageable at the beginning but often come with adjustable interest rates that rise as the market fluctuates.
Sub-prime lenders often target individuals and families with weak credit, according to the Center for Responsible Lending.
One in five sub-prime loan homes goes into foreclosure, the group reports. |
