[Congressional Record Volume 155, Number 69 (Wednesday, May 6, 2009)]
[Senate]
[Pages S5176-S5177]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         MORTGAGE FORECLOSURES

  Mr. DURBIN. Madam President, there was a debate last week on the 
floor of the Senate about the mortgage foreclosure crisis facing 
America. It was estimated a year ago we were going to lose 2 million 
homes to mortgage foreclosure.
  The new estimate from Moody's is 8 million homes. What does that 
mean? It means one out of every six home mortgages will face 
foreclosure. That is a national crisis. It is at the heart of this 
recession.
  The problem, of course, is that those people who have loaned money on 
these mortgages are content to see them go all the way through 
foreclosure and become vacant eyesores in neighborhoods across America.
  That is not good for the family who lost the home, it is certainly 
not good for the neighbors next door who watch their real estate values 
plummet. It turns out, it is not good for the bank. A bank in 
foreclosure will lose some $50,000 in the process, with all the fees 
that are associated with it, and then end up with an empty house.
  Some 99 percent of homes in foreclosure go back to the bank, and they 
sit there as eyesores because banks are not landlords; they do not cut 
the grass, they do not worry about whether the flowers are going to be 
planted in the spring. They are waiting for something to change 
economically. While they are waiting, that neighborhood is changing 
because of that foreclosed home.
  A foreclosed home in your neighborhood is going to bring down your 
property values. We offered the banks this option: We said to the banks 
and those who hold the mortgages: If you will invite in the borrowers 
at least 45 days before they would file for bankruptcy, have them bring 
the legal documents in and calculate what it would take to offer them a 
mortgage to stay in the home, if you make them the offer of a 
renegotiated mortgage and they turn it down, then they go to bankruptcy 
court and, frankly, have no recourse there to turn to, because, you 
see, bankruptcy courts will not change the mortgage on your home, even 
if you are in bankruptcy facing foreclosure.
  They will change the mortgage on your vacation home, your farm or 
your ranch but not your primary residence. I literally negotiated with 
banks for months to try to find out some way we could protect these 
homeowners to give them a second chance, if, in fact, they had an 
income and they could, in fact, pay a mortgage, and say to the banks: 
You have the last word if someone ends up in bankruptcy.
  Well, we went through months of negotiations. In the end, virtually 
all the banks, all the banks except Citigroup, picked up and walked out 
of the negotiation. They said: We are not interested in negotiating. So 
the amendment was defeated last week.
  I did not receive a single vote on the other side of the aisle and 
lost several votes on the Democratic side. Some of the people who 
watched this debate said: Well, why did you call up this measure? It 
was not going to pass. I called it up for the same reason this year as 
I did last year. This crisis is getting worse. I have met these people 
who have lost their homes in foreclosure. I feel a responsibility to 
them to make an effort so they have a chance to save their homes.
  Three of them came to a press conference in Chicago on Monday, each 
one of them telling a heartbreaking story of a home they worked hard 
for, and because of some deception in their mortgage or being misled by 
a mortgage broker or being given a stack of papers they could not 
possibly absorb and understand, these people were going to lose their 
homes, many of them in tears after being in these homes for years. 
Their neighbors came and talked about the same problem. What is it 
going to mean with this empty house in foreclosure?
  So now we find that many of the same people who opposed the idea of 
dealing directly with mortgage foreclosure are now coming forward when 
it comes to the bankruptcy of the Chrysler Automobile Corporation.
  This morning in the Washington Post, Harold Meyerson had an article 
entitled: ``What's Good for Chrysler.'' He tells the story of a court 
hearing. The court hearing is over the potential bankruptcy of 
Chrysler. The attorneys representing the hedge funds have come out in 
opposition to the Chrysler bankruptcy workout.
  Judge Arthur Gonzalez noted, and I quote from the story, in denying 
the request of the attorneys for the hedge funds:

       Blocking the loan--

  Which is being asked for--

     would force Chrysler (and, he could have added, many of its 
     suppliers and dealers) to liquidate--throwing tens (perhaps 
     hundreds) of thousands of Americans out of work during the 
     most serious recession since the 1930s and terminating 
     medical benefits to tens of thousands of Chrysler retirees.
       Liquidation--

  Which is what the hedge fund attorneys are asking for in Court--

     would also compel the American public [the taxpayers] to 
     write off the loans the government has made to the company, 
     rather than become shareholders in the slimmed-down Chrysler, 
     as the Treasury's plan suggests.

  What the Department of the Treasury and the workers are trying to do 
is to save the car company. They understand they have to make massive 
concessions. They have to change the way they do business. But their 
ultimate goal is to see Chrysler survive so that jobs will be protected 
and so that retirees' health benefits will not disappear. So, 
ultimately, the taxpayers of America who loaned money to Chrysler will 
be paid back. The hedge funds, many of them also involved in the 
mortgage crisis, have turned the same deaf ear to Chrysler's situation 
as they did to mortgage foreclosures. They are in it for one reason--to 
make a buck, take the profit and go home. They don't care about the 
ultimate consequence.
  The ultimate consequence of Chrysler liquidating is, of course, 
misfortune for the workers and retirees, but more burdens on taxpayers. 
What happens to workers who lose their jobs at Chrysler? They draw 
unemployment benefits, benefits paid for, some by the company and 
others by taxpayers. What happens to retirees who lose health care 
benefits? They become more dependent on government programs to help 
them survive.
  Once again, this part of our economy, the financial industry, has 
shown an insensitivity to the reality of the recession. Whether it is 
mortgages in Albany Park in the city of Chicago foreclosed upon, 
changing that neighborhood, or whether it is the Chrysler employees and 
retirees fighting for their economic lives, the hedge funds on Wall 
Street have said: We are going to turn a blind eye. We are not going to 
get involved. We will not make a commitment.
  There will come a time, and I hope soon, when there will be a 
reckoning--it didn't happen last week; it may happen soon--when the 
Senate stands up for a lot of people who need a voice in this Chamber, 
many of whom can't afford a lobbyist in the hallway, many of whom are 
just struggling, hardworking families. Whether they are in Michigan, 
where Senator Levin represents the State, as does Senator Stabenow, or 
in the State of Illinois which I represent, these people need folks who 
will stand up and fight for them. It won't be easy.
  For those who are prepared to stand up and fight, also be prepared to 
lose. I

[[Page S5177]]

lost on my amendment last week. But I am not going to give up. The 
defeat of the amendment on mortgage foreclosure is postponing the 
inevitable. The inevitable is that we are going to have to reckon with 
the financial institutions in this country and the fact that they do 
not have the national interest in their hearts when it comes to some of 
these basic decisions that need to be made.
  It is time for us to work with the will of the people of this country 
and to establish some order that gives working families and homeowners 
across America a fighting chance.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Madam President, before the Senator from Illinois leaves 
the floor, I thank him. He has been a voice, indeed, for people who 
don't have a voice. He has done that throughout his career both here 
and in the House. It is a pleasure listening to him.
  I believe I asked unanimous consent to have my statement on S. 454 
printed in the Record immediately after our legislation is called up 
this afternoon, and with the permission of Senator McCain, I ask 
unanimous consent to have his statement also printed in the Record at 
that time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from New York is 
recognized.

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