Republican and Democratic senators agreed Tuesday to draft bipartisan legislation aimed at stemming foreclosures, avoiding an almost-certain defeat of a Democratic bill opposed by GOP members.
The Senate voted 94 to 1 to invoke cloture — which limits debate on legislation and prevents a filibuster — on a housing stimulus bill that would grant bankruptcy judges the ability to rewrite mortgage terms. But Democrats agreed to send the bill back to Senate Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Richard Shelby, R-Ala., the panel’s leading Republican, to come up with compromise legislation that would be acceptable to both parties.
If they reach agreement, it would be offered as a substitute to the original bill. The senators have to report back to Senate leadership by noon today. “The goal is to do something about housing,” said Senate Majority Leader Harry Reid of Nevada, who sponsored the stimulus bill.
The agreement staved off an expected filibuster but left unclear what provisions would end up in the final bill, including whether the bankruptcy provision — which Republicans and the White House strongly opposed — would survive.
Allowing Sens. Dodd and Shelby to negotiate “would at least give us an opportunity to get off on a bipartisan footing,” said Senate Minority Leader Mitch McConnell, R-Ky.
The bankruptcy provision remains the biggest sticking point in the bill, which would also boost funding for homeowner counseling and community development in neighborhoods depressed by foreclosures. The bill also would amend the Truth in Lending Act to enhance mortgage disclosure requirements.
Under Sen. Reid’s bill, judges could reduce, or “cram down,” mortgage debt on primary homes for borrowers in bankruptcy proceedings.
But opponents, including mortgage bankers, say that would raise the cost of credit. The housing bill failed in a similar vote in February as the White House threatened a veto.
