Lending Industry Still Fighting Mortgage Modification as Foreclosure Crisis Continues

/PRNewswire/ -- As the House debates the Wall Street Reform and Consumer Protection Act of 2009 this week, the lending industry continues to fight a mortgage modification provision that would allow bankruptcy judges to adjust the terms of mortgages to help struggling families as part of a broader effort to stem the worsening foreclosure crisis.

Lending industry opponents of the measure, some of the biggest recipients of federal bailout money, have spent lavishly on lobbying and campaign contributions in 2009. An analysis by Common Cause and Public Campaign shows that the coalition of banks opposed to the mortgage modification provision - including Citigroup, Bank of America, Wells Fargo and JPMorgan Chase & Co -- have spent more than $80 million on lobbying and more than $6 million on campaign contributions this year, according to data from the Center for Responsive Politics.

"These Wall Street banks were rescued by the taxpayers after they almost collapsed under their own bad investments," said Common Cause President Bob Edgar. "They took that money and are spending millions lobbying and making campaign contributions to stop proposals that would help those same taxpayers keep their homes."

"From regulatory reform to health care, campaign cash from Wall Street interests is permeating every corner of debate in Washington, D.C.," said Nick Nyhart, president and CEO of Public Campaign. "Congress must create a political system that works for all of us, not just those with money to spare. It's time to pass the Fair Elections Now Act."

The House is currently debating the Wall Street Reform and Consumer Protection Act of 2009 (HR 4173), the most significant overhaul of the financial industry since the New Deal. It may take up the bankruptcy amendment offered by Judiciary Committee Chairman John Conyers Jr. (D-MI) and Rep. Zoe Lofgren (D-CA) as soon as today. The House passed identical language in March, but the effort ran aground in the Senate.

Some House members want the Senate to reconsider the proposal, as most major lenders have not responded to the voluntary initiatives adopted in place of the bankruptcy provision. The Treasury Department estimates that only one-in-five eligible households have received government assistance through these voluntary programs.

Common Cause and Public Campaign continue to work to pass the Fair Elections Now Act (H.R. 1826 / S.752) as the comprehensive solution to the pay-to-play culture in Washington, D.C. exposed by the debate over regulatory reform. The legislation, sponsored by Sen. Dick Durbin (D-Ill.) and Rep. John Larson (D-Conn.) would create a citizen-funded election system for Congress in which candidates could run for office on a blend of small donations and public funds.

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Cash for Clunker Mortgages Program Unveiled

/PRNewswire/ -- The Cash for Clunker Cars program ended on August 24, but another stimulus program has recently been established. The Cash for Clunker Mortgages program begins October 19 and enables holders of nonperforming mortgages to trade them in for cash.

Holders of nonperforming First Mortgages are losing money each month as holding costs accrue and property values deteriorate. In an effort to allow lenders and servicers to focus their efforts on the loans more likely to qualify for the Home Affordable Mortgage Program (HAMP), Cash for Clunker Mortgages will pay competitive prices for nonperforming First Mortgages. Nonperforming loans, particularly those in bankruptcy or other litigation, demand a disproportionate amount of time and effort to service. Thus, loans eligible for Cash for Clunker Mortgages include charge offs, those secured by low-value homes and those owned by borrowers in bankruptcy or litigation, all of which are high maintenance for the servicing industry.

In an effort to provide prompt dispositions of these assets, Preliminary Indicative Bids will be furnished within 48-hours. Once the Preliminary Indicative Bid is approved by the seller, due diligence will be completed on the mortgages. Funding typically occurs within 3 to 4 weeks of receiving summary loan data. Cash for Clunker Mortgages is open to all holders of nonperforming mortgages secured by single family homes and 2 - 4 unit properties anywhere in the United States. Furthermore, both bulk pools and single assets are eligible.

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