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Senate Democrats Kill Bill That Mandated Protections Against Foreclosures

By Josh Cohen February 11, 2010

Big banks in Washington got a little protection yesterday when South Seattle Sen. Adam Kline's (D-37) foreclosure bill died in the Senate Ways and Means committee.

As we reported in Morning Fizz, the bill passed in the voice vote, but when it came time for the yeas to sign on (the critical part of a bill's passage out of committee) several democrats backed out. Here's an update: The actual 'No' votes were Redmond Sen. Rodney Tom (D-48), Snohomish Sen. Steve Hobbs (D-44), and Seattle Sen. Ed Murray (D-43). (The bill ended up three votes shy of making it out of committee. No Republicans supported moving the bill to the Senate floor for a vote.) Tacoma Sen. Debbie Regala (D-27) signed as "pass without recommendation" which is essentially a neutral vote since it does not move a bill out of committee. Regala tells PubliCola simply: "I didn't feel the bill had enough merit for me to support it."

The bill would have given homeowners some protections from foreclosure—a plus in Washington where, according to a study by the Center for Responsible Lending, foreclosure proceedings began for 30,000 people last year with another 130,000 expected over the next three years. The bill would haverequired a mandatory good-faith mediation between lenders and borrowers to evaluate the possibility of modifying the loan. The modification would help homeowners pay their mortgage and keep their homes. According to Beverly Spears, Director of the Statewide Poverty Action Network, the bill was a win-win for banks and borrowers since people could get a second chance on their homes and lenders could get paid. Spears is disappointed by the outcome of the committee meeting.

"That Democrats would be defending the banks is just unconscionable to us," said Spears. "It was taxpayers who bailed out the banks when they were in trouble. All we were asking was a good faith effort on the part of lenders to see if they would meet with the folks and modify their loans to keep them in their homes."

The bill was amended in Ways and Means to exempt small lenders and credit unions leaving only big banks on the hook for the good-faith mediation and renegotiation.

I have calls into Seatte Sen. Murray. (Tom had been a 'No' vote all along, according to Spears.) Sen. Kline wouldn't comment on his colleague's votes saying simply he was glad we were doing the story and felt the bill would have prevented unnecessary foreclosures.

As we reported yesterday, a separate bill mandating protections against foreclosure—preventing banks from foreclosing on temporarily unemployed people—was gutted in the House.
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