news-record.com

U.S. Rep. Brad Miller sounded tense, maybe even angry, on the phone Monday as he talked about a housing bill that contains a bankruptcy provision he has worked on for more than two years.

The House is scheduled to vote on the measure today.

Miller was much more relaxed when Washington Watch talked to him in January about his legislation that would allow federal bankruptcy judges to modify first mortgages. Under current law, judges can restructure loans on vacation homes or investment properties but not the house where a borrower lives.

That provision, which has become something of a pet project for Miller, is part of HR 1106, which has not only gotten the nod from party leaders but the backing of President Barack Obama. As currently drafted, the bill would be limited to loans that have already been made, not new loans going forward, a change Miller says he can live with.

So he should be a happy guy, right? Not so much.

It turns out the provision has become the focus of quite a bit of controversy and lobbying by opponents in Washington as the vote approaches.

“I wish I could be in every member’s office when they see the lobbyists who are against it,” Miller said Monday. “A lot of this stuff is just pulled out of thin air.”

As it is, he has been going from caucus to caucus meeting and bending the ear of any congressman willing to listen to him explain the bill.

Miller, a Raleigh Democrat who represents parts of Greensboro and Rockingham County, typically speaks with a certain reserve, even on topics where he feels passionately. But he has been throwing rhetorical punches as of late, focusing particular ire on the banking industry that he said made questionable loans that it turned into questionable securities and now is seeking help from the government to remain solvent.

“You know what this industry’s business practices have been like, so how honest do you think their lobbying practices are?” Miller asked.

Youch.

The flip side of the story, according to the Mortgage Bankers Association, is that allowing judges to rewrite mortgages will increase the risk associated with home loans. That, they argue, will increase the cost of home loans.

Hank Cunningham of Greensboro-based Cunningham & Co. agrees with that assessment. His company makes home loans from offices across the state.

And while he keeps and services some mortgages himself, Cunningham said he frequently packages home loans for sale of securities.

If investors have to worry not only about defaults but about a bankruptcy judge rewriting the loan, he said, they’ll want a higher interest rate on the bonds they buy, which means mortgage brokers will have to charge a higher interest rate to borrowers.

“It will just increase the cost of credit,” Cunningham said.

He added, “The issue is you’ve got to put some rules around it. To say the judge has the latitude to rewrite the terms of a mortgage without any guidances reduces the number of investors willing to purchase mortgages.”

Miller argues that there would be rules and that judges already have a template for rewriting mortgages. He says what banks and mortgage lenders really object to is that this would require the companies to do something rather than cajoling them with loans or grants.

“It’s the only proposal to deal with the foreclosure crisis that doesn’t take taxpayer money and give it to them,” Miller said. “This bill would make them do something.”

The measure has become largely a partisan issue, with Republicans lined up solidly against it. However, even some Democrats are balking. While Miller has support from the likes of Rep. Mel Watt, a Charlotte Democrat who represents parts of High Point and Greensboro, Rep. Heath Shuler, a Democrat who represents western North Carolina, voted against a procedural motion on the bill last week.

Burr talking back

President Barack Obama used his weekly radio address to sell his ideas for the $3.6 trillion federal budget proposal he sent to Congress last week. The

Republican response came from North Carolina’s own Sen. Richard Burr.

The short version is this: Obama said we need to spend more, particularly in health care, education and renewable energy, to dig the economy out of recession and prepare the United States for the future.

Burr said those are fine ideas but that the federal government ought to be restraining spending rather than creating a $1.75 trillion budget deficit.

“Every time Congress and the president spends a dollar, it’s actually a dollar plus interest that our children and grandchildren will have to pay back,” Burr said. He added that “Washington is in a state of denial” and that Obama’s budget proposal would continue to spend too much.

Votes

The House last week passed an omnibus appropriations bill that keeps the government running through September. The vote was 275-178.

Reps. Brad Miller and Mel Watt, both Democrats, voted for it. Reps. Howard Coble and Virginia Foxx, both Republicans, voted against.

Also in the House, HR 80 adds “non-human primates” to the list of critters that are unlawful to sell internationally or across state lines for purposes such as the pet trade. The vote was 323-95. Miller and Watt voted for it, and Coble and Foxx voted against.

In the Senate, a bill giving the District of Columbia a full voting member of Congress — rather than just the non-voting delegate it has now — passed 61-37. Democratic Sen. Kay Hagan voted for the measure, and Burr voted against.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com