Progress Illinois

After a winter storm blanketed much of the Washington, D.C. area on Monday, making it difficult for lawmakers to get back to the capitol from their districts, the House pushed back the items on this week’s agenda, including a possible vote on their version of Sen. Dick Durbin's proposal to allow bankruptcy courts to modify mortgages for homeowners facing foreclosure.

The snowstorm worked to the advantage of skeptical House moderates, such as Illinois’ own Melissa Bean, who asked the caucus leadership for more time to negotiate. Since it originally surfaced, the financial services industry has been fighting this legislation vigorously because they think it will impose steep and unpredictable costs on mortgage providers and servicers. These Blue Dogs won some concessions from the Democratic caucus leadership yesterday, as the Washington Post reported:

The compromise version, for example, requires that a homeowner share with the lender any profit from the eventual sale of the home if a bankruptcy judge lowers the principal balance. It also gives preference to lowering a homeowner’s interest rate over cutting the principal balance.

The compromise also limits homeowners’ ability to ask a bankruptcy judge for help if they have already received or been offered a loan modification that lowered their payments to 31 percent of their income.

OpenLeft’s Chris Bowers wrote last night that it appeared to be a “true compromise”  -- in contrast to “the fake compromises of the last eight years where Democrats and/or progressives get next to nothing while Republicans and/or conservatives get 95% of what they want.”

But the fact that any compromise was necessary within the Democratic ranks speaks to the undue power that Wall Street still wields.

Just look at Bean. As a member of the House Financial Services committee, she was the recipient of more than $900,000 in individual and PAC donations from the finance, insurance, and real estate industries last year. That undoubtedly affected her decision to advocate for the mortgage industry’s favored changes even though these companies are doing very little to help homeowners snowed under by unaffordable mortgages.

And the need for assistance is immense, particularly right here in Bean’s home state. In a Sun-Times story yesterday, Francine Knowles highlights a new National Training and Information Center report that shows foreclosures in Chicago doubled from 2006 to 2008 and 86 percent of the mortgages were made within the past three years. In fact, Illinois is just one of eight states with a foreclosure rate above the national average.

The House may vote on the measure tomorrow and we'll be reporting the roll call when it happens.