Consumer Groups Rap Senate Housing Bill

Consumer groups are contending that the Senate's housing bill provides "very little" relief for homeowners at risk of foreclosure now that Sen. Richard Durbin, D-Ill., has withdrawn an amendment that would have allowed bankruptcy judges to modify mortgages. "We are left with a bill loaded with special considerations for mortgage companies and homebuilders that does very little for homeowners who were sold predatory loans by mortgage lenders," says a coalition of consumer and civil rights groups. The Senate bill includes a net operating loss carry-back provision that would allow homebuilders and other companies to deduct losses in 2008 and 2009 from their profits in prior years. The Senate is expected to complete action soon on the housing bill, and Sen. Arlen Specter, R-Pa., may offer a bankruptcy amendment targeting adjustable-rate mortgages. The Specter bill would allow judges to roll back increases in the mortgage interest rate, but the lender would have to consent to a reduction in the principal amount of the mortgage. The Specter bill would "not be acceptable to the Bankruptcy Coalition," said Bill Himpler, the American Financial Services Association's top lobbyist. Republicans blocked a vote on Sen. Durbin's amendment, which would allow judges to unilaterally reduce the interest rate and principal of a mortgage. The mortgage industry strongly opposes any bankruptcy code change affecting the treatment of a debtor's primary residence.