Yesterday, U.S. Representative Maxine Waters reintroduced the Systematic Foreclosure Prevention and Mortgage Modification Act so that it may be considered by the current Congress. Referred to by shorthand as H.R. 37, the legislation would authorize the FDIC to cover one thousand dollars in expenses for lenders who renegotiate more sustainable terms for the mortgages of people who are nearing foreclosure on their houses. The FDIC would also guarantee half the worth of renegotiated mortgages.
The best part is where the money to pay for the FDIC’s mortgage restructuring costs would come from – money originally allocated for a Wall Street bailout. Instead of handing out money to Wall Street investors, as part of a liquidity scheme that has failed to work, government assets would be used to provide the structure necessary for ordinary Americans to stay in their homes. (I’m basing this statement on funding from the original bill, H.R. 7326, introduced to Congress on December 10, 2008, without enough time for consideration before the 110th Congress closed up shop for good. The resubmitted version of the bill, H.R. 37, is not yet available to be read by the public.)
Waters’s legislation looks like a plan that could responsibly protect our nation from true economic disaster. But will it have the lobbyists required to gain passage?