Senators Use Procedural Vote to Derail Foreclosure Bill
Feature Story by Angela Okamura - 2/28/2008
As the public debate around the foreclosure crisis continues to build, civil rights leaders are rallying around solutions they say will help homeowners keep their homes.
The current controversy centers on the Foreclosure Prevention Act of 2008. The most helpful – yet most controversial – part of the bill would give struggling homeowners a second chance through the Chapter 13 bankruptcy process and adjust interest rates to affordable and fair levels.
Forty-five senators used a procedural vote last night to block the bill from debate, even though the bill could potentially save hundreds of thousands of homes from foreclosure. Only 34 votes are needed to block debate on a bill in the Senate, although debate could continue if 60 senators vote to remove the block.
Advocates argue that using procedural maneuvers on this bill only makes the situation dire for the nation's homeowners who will have to wait longer for relief.
"These 45 senators are playing politics with people’s homes ... employing procedural tricks to avoid going on record against legislative fixes that could save hundreds of thousands of their constituents' homes from foreclosure," said Leadership Conference on Civil Rights President and CEO Wade Henderson.
Advocates of the bill, including many civil rights organizations, cite the cost of implementation as an advantage. Because the public would not have to pay to save the homes, it would not amount to a "bailout," as some opponents have asserted.
"It is outrageous that we have more protection for consumers to purchase a toaster than for receiving a predatory loan," continued Henderson, restating the concern that troubled homeowners receive virtually no protection, while many of the lenders that created this crisis have received bankruptcy relief.
"We simply can’t afford to let the industry that created this epidemic – and is now being consumed by it – to dictate the terms of the clean up. And we can’t let our senators forget that they work for their constituents, not the lending industry," said Henderson.
Although this crisis "is hurting everyone," as Senate Democratic Majority Leader Harry Reid, D. Nev., pointed out at a press conference in late February, Latinos and African Americans were hit the hardest, in part due to unscrupulous subprime lenders.
African-American (52 percent) and Latino (40 percent) borrowers are disproportionately represented in the subprime market. A December 2006 CRL report found that the foreclosure crisis would hit minorities particularly hard, affecting 8 percent of Latino families and 10 percent of African-American borrowers compared to just 4 percent of white borrowers.
Wade Henderson, president and CEO of the Leadership Conference on Civil Rights (LCCR), said the situation could amount to the "greatest loss of wealth in African-American and Latino communities in modern history."
Opponents claim that the bill would make credit more expensive and add instability to the market. But civil rights groups say that this argument ignores the fact that the bankruptcy provision would only apply to existing loans, and only loans that would otherwise end in more expensive foreclosures.
