The banking industry is swarming over Capitol Hill in an effort to gut or defeat S. 61, the Helping Families Save Their Homes Act.  The latest tactic is to try to limit the loans that can be modified in bankruptcy to sub prime loans.

These Senators are thought to be undecided or subject to being swayed one way or the other:

Max Baucus – Montana

Robert Byrd – West Virginia

Tom Carper – Delaware

Tim Johnson – South Dakota

Mary Landrieu – Louisiana

Joe Lieberman – Connecticut

Blanche Lincoln – Arkansas

Claire McCaskill – Missouri

Ben Nelson – Nebraska

Mark Pryor – Arkansas

Jon Tester – Montana

The freshman Democratic Senators have no history with this issue:

Mark Begich — Alaska

Michael Bennett – Colorado

Roland Burris – Illinois

Kirsten Gillibrand  — New York

Kay Hagan – North Carolina

Ted Kaufman – Delaware

Mark Udall – Colorado

Tom Udall – New Mexico

Mark Warner – Virginia

A few Republicans

Bob Corker – Tennessee

Richard Lugar — Indiana

Mel Martinez – Florida

Arlen Specter — Pennsylvania

George Voinovich — Ohio

If you or family or friends are constituents of any of these lawmakers, give them a call or email in support of a no cost opportunity to stop the housing collapse.

Call them toll free: 877.354.4958

Or email at: www.nacba.org/TellCongress

Ask them to support a strong and comprehensive judicial mortgage modification buill.

I’m giddy at the prospect of modifying mortgages in Chapter 13 as an alternative to Truth in Lending suits.  While I’m finding lots of violations, and they give me levers against the lenders,  the TILA statute contemplates that the wronged borrower return the difference between their damages and the original loan to the lender.

In this credit market, I am fearful that many borrowers, particularly the older and the lower income homeowners, won’t be able to get a loan to tender back to the lender.

With the prospect of  mortgage modification, I expect that in a number of my cases, modification of the existing loan, especially if we can reduce principal to the current value of the property, will produce a better result for the client and one that does not require a new loan.

Pretty heady stuff.

For the past couple of years in Northern California, there has been a flurry of refinancing fueled by low interest rates, substantial property appreciation, and financial needs of homeowners. While before, it seemed that every unemployed high tech worker here got a real estate license, it seems like half of them now became loan agents. The terms of the loans they peddled got more and more complex at the same time the experience and quality of the persons pushing the loans declined, in my view.

I’ve wondered whether all of these non standard loans might present Truth in Lending violations. Truth in Lending is federal law designed to see that borrowers get clear and meaningful information about the cost of a proposed loan before they commit. A federal judge in the Eastern District of Wisconsin just found disclosures by Chevy Chase Bank in connection with an adjustable rate mortgage to violate Truth in Lending, and certified the case as a class action. Andrews v. Chevy Chase Bank, Case No. 05C0454, 1/16/07.

One of the remedies for violation of Truth in Lending is the rescission of the loan and the crediting of all payments on the loan to principle. The statute of limitations is generally three years from the transaction.

I suspect that this case, against this lender, is just the beginning.

Cathy Moran

The enormous devastation wrought by Katrina has prompted a push to delay implementation of the harsh new bankruptcy provisions or to exempt victims of disasters from its more burdensome provisions.

What Congress missed, or didn’t care to consider, when it enacted the 2005 bankruptcy bill, is that the lives of most bankruptcy debtors are just paler relicas of the hurricane victims. Outside the hurricane’s wake, these flattened financial lives are found one a block, rather than for blocks on end. But the sense of fear and dispair about their finances is not dissimilar.

When we remember that nine out of ten bankruptcy debtors have experienced job loss, divorce or significant illness, we’re left with the sense that these folks are also victims of things largely out of their control. Yet the “leadership” in Congress waves the banner of “personal responsibility” while marching to the tune of the credit industry.