[Congressional Record Volume 154, Number 50 (Tuesday, April 1, 2008)]
[Senate]
[Pages S2261-S2262]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             HOUSING CRISIS

  Mr. SPECTER. We are scheduled to have a vote at 2:15 this afternoon 
on a motion to invoke cloture on the motion to proceed to legislation 
that has been filed at the desk by the majority leader. This 
legislation contains a number of proposals, the most important of which 
is under consideration by the Judiciary Committee at the present time. 
I have filed alternative legislation, captioned S. 2133, which offered 
relief to homeowners who have so-called variable rate mortgages and who 
are facing bankruptcy.
  Home buyers who have variable rate mortgages are sometimes surprised 
to find their payments, after a period of time, jump from--
illustratively--$1,200 a month to $1,900 a month, an enormous change 
that they had not expected because they have a variable rate mortgage.
  I believe that in these situations, there is a good basis to give 
bankruptcy courts authority to inquire into the circumstances of such 
mortgages and to roll back or reduce the interest rates. The rate of 
foreclosure for these types of mortgages has more than doubled in the 
past year while foreclosure among homeowners with fixed-rate mortgages 
has increased only modestly. Frequently, the person taking out a 
mortgage doesn't understand there is a risk that there will be a large 
increase in the interest rates on variable rate mortgages. Sometimes 
there is deception on the part of the lender or mortgage broker. 
Sometimes it may even constitute fraud. I believe the best policy would 
be to allow the bankruptcy courts to consider these matters on an 
individual basis. The lender is still going to receive, ultimately, the 
full amount of the principle but not with interest rates that put the 
home buyer in a precarious position, or even foreclosure.
  Senator Durbin has introduced legislation captioned S. 2136 that goes 
much further by authorizing the bankruptcy court to reduce the 
principal amount of the mortgage. I am opposed to that approach because 
it will increase the risk associated with mortgage lending and 
discourage lenders from providing capital for home mortgages. The 
Bankruptcy Code currently does not allow for the modification of 
mortgages because Congress did not want to discourage lenders from 
giving mortgages to future homebuyers. There is an excellent statement 
by Justice Stevens in Nobelman v. American Savings Bank in which he 
gives that precise reason for the provision barring modification of 
mortgages. Congress must be cautious about making changes to the 
Bankruptcy Code that will leave consumers worse off in the long run. I 
believe Senator Durbin's proposal would have that effect.
  I believe we ought to be acting on the issues confronting us on 
housing, but I am concerned that given the current state of affairs, 
the procedures to be followed will preclude amendments, such as my 
interest in offering an amendment with the substance of my bill, S. 
2133. The better practice would be to work through the Judiciary 
Committee, which is now considering the Durbin legislation, with my 
legislation offered in Committee as a second-degree amendment. We are 
scheduled to have a markup on that on Thursday. Regular order would 
suggest that is a better practice to have it come out of the Committee, 
where we are in the process of having a markup. We will later have a 
committee report, and it would be much more conducive to appropriate 
deliberation than having a measure filed under Rule XIV, where it is 
lodged at the desk, where there has not been analysis and a markup, and 
there has not been a committee report.
  If it is possible to offer amendments, I would consider supporting 
the cloture motion. However, if the majority leader is going to fill 
the tree and not allow amendments, then I am opposed to that procedure 
and would oppose cloture. The practice of so-called filling the tree is 
highly undesirable. The essence of Senate procedures is to allow 
Senators to offer amendments.
  In February of last year, more than a year ago, I introduced a 
resolution, S. Res. 83, to change the standing rules so the same person 
could not offer both a first-degree and a second-degree amendment. This 
change of the rules would preclude the majority leader, who has 
priority of recognition, from so-called filling the tree to prevent 
anyone else from offering amendments.

[[Page S2262]]

The Rules Committee has not acted on that resolution, but I think that 
is an important piece of business, that our rules ought to be changed 
so the majority leader could not be in a position to fill the tree and 
preclude other Senators from offering amendments.
  I am open as to what is going to happen on the cloture vote this 
afternoon. But certainly, if there is not an opportunity for me to 
offer my amendment or for others on this side of the aisle to offer 
amendments, I will oppose it.
  I believe I have some time left on my order. How much time do I have 
remaining? I have been asked to yield some time to my distinguished 
colleague from Utah. I believe this is Republican time at the moment. 
Parliamentary inquiry: Are we still on Republican time?
  The PRESIDING OFFICER. The time is evenly divided until 12:30, a 
little less than 23 minutes.
  Mr. SPECTER. I don't wish to step in front of the distinguished 
Senator from Colorado, his having waited on the Senate floor. But at 
any rate, I will not utilize the last 5 minutes of my time so it will 
be available to the Senator from Utah, either now or after the Senator 
from Colorado finishes his time because he has been waiting.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. I ask unanimous consent that I follow the distinguished 
Senator from Colorado.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Colorado.

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