This was on a motion to bring to an immediate vote the resolution or “rule” setting the terms under which the House could consider the legislation aimed at slowing home foreclosures and reviving the housing market.
The legislation was developed during a severe economic downturn. It provided bankruptcy judges with the ability to modify mortgages on principal residences, allowed the Departments of Veterans Affairs and Agriculture and the Federal Housing Administration to guarantee and insure mortgage loans that are modified, extended protections against civil claims to companies servicing loans that engage in loan modifications, and made permanent what had been a temporary increase in FDIC deposit insurance.
The debate on the motion to have the House immediately consider the rule for the legislation focused more on the merits of the bill than on the rule itself. Rep. Hastings (D-FL), spoke in support of the bill. He first acknowledged that he shared the concern of some who have criticized permitting mortgage loan modifications because those modifications could cause “massive losses to financial institutions, increase the cost of borrowing for other homeowners or lead to a sudden surge of bankruptcy filings.” He then said that he thought these events would not occur because bankruptcy judges would make their decisions based on whether a borrower had acted responsibly and whether the claim had merit.
Hastings also said that the bill “will maximize, not lessen, the value of troubled mortgages for the lender, and avoid the decline in property values in neighborhoods where homes have been foreclosed on.” He dismissed suggestions that there will be widespread voluntary bankruptcies as a result of the legislation, and argued that the bill is actually designed to project those “who played by the rules and acted responsibly (and) are now finding themselves under water through no fault of their own.”
Rep. Sutton (D-OH), who also supported the bill, claimed: “Millions of families are in danger of losing their homes. And the foreclosures crisis has had and will have a rippling effect all across the country. As foreclosures go up, surrounding home prices go down, tax revenue for vital public services falls, financial institutions are saddled with losses, access to credit shrinks and our economy grinds to a halt. This legislation helps put a stop to this deadly spiral.”
Rep. Foxx (R-NC), who led the opposition to the measure, first expressed her concern that “while this bill claims not to be needing a lot more money eventually our (Democratic) colleagues . . . are going to come back asking for more money to deal with this issue.” She then noted that “94 percent of the people in this country are now paying their mortgages and paying them on time”, and that the bill will only excuse and help those people who did not do the right thing.
Rep. Foxx went on to criticize the rule setting the terms for considering the legislation because it permitted the combination of one bill from the Financial Services Committees, which she said Republicans “could probably support”, and another from the Judiciary Committee, which she said they could not support.
Foxx also criticized the rule because it limited the amendments that could be offered to the legislation. She claimed that the Democratic chairman of the Financial Services Committee “told us that he was willing to accept some of the amendments that had been offered. We (Republicans) had 20 amendments . . . but only one of those amendments was (allowed by the rule) to be offered today, and it looks like we may have a problem with that amendment . . . .” Foxx further argued that “what this bill is going to do is it is keeping us from being bipartisan . . . .”
The vote on the rule was 238 -183. All two hundred and thirty-eight “aye” votes were cast by Democrats. Eleven other Democrats joined all one hundred and seventy-two Republicans present and voted “nay”. As a result, the House was able to move to an immediate vote on the resolution setting the terms for debating legislation aimed at slowing home foreclosures and reviving the housing market.