Forcing? What utter horsepuckey. Lenders were CLAMORING to extend subprime loans, competing ruthlessly for new business in a true "race to the bottom" where more and more of the traditional requirements to qualify for a mortgage were stripped away -- holding a good job, having strong or even middling credit scores, the 10% downpayment.

Changing the law was what the BANKS wanted: They lobbied HARD for it in the 1990s and got it.

I hesitate to ask you to remember history since you so clearly DON'T, but...from 1995 through 2006 Democrats were the MINORITY PARTY in Congress. Sen. Dodd and Rep. Franks had NO POWER to pass ANYTHING on their own when the groundwork for the Housing Bubble was set in place. The REPUBLICAN Majorities were required.

You know, back when Bubba and Dubya were President.

See, Government didn't force banks -- they did it to themselves, driven by sheer greed to charge 8%, 9%, even 12% interest on a home loan, taking full advantage of rising markets and the lack of financial savvy among many younger and first time borrowers.

And for a while, borrowers didn't see it, as rising home values hid the impact of such high interest rates. "Home-flipping" was actually considered a career path, and every element of culture -- lenders, the media, a skewed tax code that gave deductions based on MORTGAGE INTEREST paid -- pushed people into buying far bigger homes than they needed.

Bankers made the "housing mess," and have been deflecting blame ever since.

Rebecca with all due respect, we have spent collectively 100s of billions of dollars bailing people out of homes they shouldn't have been in in the first place. Where is the personal responsibility of these people? How are these people going to learn the lessons of life. If you buy a home you can’t afford, then you might lose it. This is on top of the fact that we borrow .40 of every $1 we spend in this country. Which means to implement this insane idea of Rep Peters, we will have to borrow more money from China. Every kid that is born today, June 15, 2012, will have a debt of 50K on their first day. Not in 10 years or 20 years or 30 years, today, on their birthday. Many of us are sick and tired of paying for everyone else's screw ups. I play by the rules, I don't live in a home I can't afford, I don't carry debt on my credit cards, I don't drive a Range Rover Sport. We make a very nice living. Stop asking us to pay for other people’s foolish behavior.

R Gibson - taxpayers have spent billions bailing out BANKS. We are asking banks to be responsible and step up to the plate to help the sector they destroyed, so we can all move forward. I think many have a poor understanding of the housing crisis, which is unfortunate, especially as move toward an election.

Also, as a Republican for decades, I was waiting during the 2000's for fellow R's to stomp and protest when we blew a surplus, exploded deficits, increased public sector hiring exponentially (to get out of recession), got rid of pay-go in 2002, kept 2 wars OFF the books on supplementals till the next sucker, er POTUS, got in, instituted a new unpaid, NO-BID social program - Medicare Part D, and issued not one, but two, unpaid Stimulus packages (AKA Bush tax cuts - which resulted in slowest GDP and job growth since 1949). Part D + W's Stimulus/tax cuts account for the majority of current debt and structural debt moving forward.

So, excuse me if I'm a bit disenchanted and feel that the party I supported so many years lacks CREDIBILITY when it comes to complaining about debt.

The kicker for me as an R, and policy wonk for years, is when Boehnor couldn't get the votes for the "Big Deal" Debt Deal last summer. The details and items D's put on the table were such that ANY other R would previously drool over. Would've been historic! But, no deal. If past is prologue, current crop of R's only care about debt when someone else in WH. Shame.

Erin, as an R myself, I share your disillusionment. I was privileged to vote for the first time for RR. It’s been downhill ever since. I would like to point out that you left out two other very important items that W got us into, Iraq and Afghanistan. I would encourage you to read closely the numerous articles about the repeal of the Glass-Steagall Act under the Clinton Administration and Barney Frank that led directly to this result. “It was under the Clinton Administration when the banking laws were repealed. The Progressives were behind this because they could then use federal threats to force banks to make government insured loans to those who were not qualified, while giving Wall Street more room to go crazy with investment scams.” It wasn’t just the banks either. My experience with the 10 or so loans I have done over the years suggests to me that the biggest culprit is the mortgage brokers. If you tried to get a loan at Chase or Comerica, it was a lot harder to do then at some other nonbank affiliated places. The brokers had a real cozy relationship with the appraisers who were running amok and valuing houses way above market prices. Wall street cashed in with the derivatives and viola the financial crises. Have you noticed, we have not lost a bank yet, we lost Lehman, ML was absorbed, etc. But no banks failed. The banks were simply a pawn in a larger scheme. So much for an uninformed electorate eh Jim?

I can see my use of the word "allow" is confusing - I'm sure Mr. Peters knows that lenders and loan service companies can do that now, because he mentioned the practice during the press conference. As I understand it, the bill gives them more of an incentive to do it, with the avoidance of foreclosure and the promise of recovering some of that money by splitting the profit from the eventual sale of the home.

Randy – Not that I agree with all Peters does, but he does have a clue on this. I think you have mistaken what he and other lawmakers are trying to accomplish. They’re trying to work on the macro problem in order to get us over the hump of the housing collapse thus moving the broader economy forward.

That can’t be done by simply judging everyone in trouble assuming that failure was all due to poor planning. A job loss or a long term illness (especially w/o insurance) would put most middle class families in peril.

Remember – it was the high risk activity banks engaged in, with OUR money, that caused the financial and housing crisis. That, and crazy “everyone needs a home” policy that W’s admin pushed, and relaxed regulations. It convinced many that those exotic 0% loans would be fine.

All that risk by the BANKS led to the collapse, and what ensued was the extraction of wealth from your home and mine (average wealth of American from ’07-’10 down 40%, mostly from decline in home value). Not your fault or mine, WE were the responsible ones. You and I then bailout the banks, they survived and are now back to record profits earned by using the FREE money WE loaned them. Don’t you think they should at least a bone? Do you like to lend money with no return? I don’t.
[more -]

Randy (continued) It IS in the banks interest. Everyone wins when the housing market turns around, including the banks. You said: “they get to foreclose on and sell the property, and keep 100% of the proceeds” The proceeds on peanuts sounds good? Do you think they would rather keep doing short sales and foreclosures instead of sales from a healthy market? Clearing out distressed props/foreclosures will help everyone.

Please reread what County Treasurer and RE folks have to say about this and the effect on values and local coffers.

RE: other productive housing programs : HARP – Many have been able to take advantage of the Oct 2011 “responsible homeowner” addition to HARP in order to take advantage of historically low interest rates. Responsible homeowner’s with loans backed by Fannie or Freddie can participate. Home owners MUST be current on their mortgage. Extra fees to participate in the program have been waived, and home owners' eligibility won't be contingent on how far their home's value has fallen. Program runs thru 2013.

Really, this is the LEAST banks can do towards making taxpayers whole, and give us some return on OUR investment in THEM.

Obama has also proposed opening this “responsible homeowner” refinance program to those without Fannie/Freddie backed loans. But, it hasn’t been able to make it through the House. Unfortunately, I suspect nothing will till after election.

Thanks for the discussion, and good luck.

Erin, do you really think the banks are going to pay for this? The banks are going to lobby that in order to do this the feds are going to have to kick something in. They are not going to take a hit to the balance sheet and profits in order to do this out of the kindness of their hearts. We don't have that money so we will have to borrow it from China. I am sorry you are very smart and have a good understanding of the issue, but I think you are being really naive as to who you think is going to pay for this.

RG - right with you. Banks/lobbyists will try to pass along costs, you bet. The real problem of this and so many gov't problems - money in politics. Money = Speech [Buckley v. Valeo 1976] + worst SCOTUS decision ever: Citizens United = the Wild West of lobbyist and campaign spending. $100 for a hammer instead of $9 at Target? $220 for that med instead of $17.50?

Sweet, sweet deals and contracts, bought and paid for by lobbies, facilitated by our purchased Congress, upheld by our purchased Courts (2010 - MI was #1 nationwide for outside, unnamed monies in Court races), upheld again by SCOTUS, some of whom headline Conservative ThinkTank retreats that promise "special access to Supreme Court Justices" for the SuperPAC's leaders, big money contributors who attend.

Gotta love democracy!
Answer: campaign finance overhaul. Repeal Citizen's United.

Erin, you are revising history. It was Barney Frank, Chris Dodd and President Clinton that started and pushed the "everyone needs a home" policy. It was already over the cliff when W (nor a fan of him) took over.

Then the banks made it worse by bundling up garbage mortgage loans the government forced them to make into even bigger bags of garbage.

Hey Mark - Sorry, not trying to revise history - trying to compress and simplfy for space sake. "It was Barney Frank, Chris Dodd and President Clinton that started" - Yup.

But, as you'll recall, it was in W's second term that the 0% down, interest only mortgages came in en masse. Also when MBS's and other exotic, complicated financial instruments became the fashion with municipalities who had no idea what they were investing in jumped in head first. And, the "more regulations always bad" philosophy ruled. But really, no one complained until it all went bad.

Clinton got rid of Glass-Steagall in 1999. That was the snowball that started, before the avalanche.

"Then the banks made it worse by bundling up garbage mortgage loans" - Yup, okay. "the government forced them to make into even bigger bags of garbage." Mmmm, not sure what you mean by that... Can you explain?

Both parties were complicit for sure, but the height of the housing insanity WAS during W's term. And if the standard seems to be that whoever happens to be POTUS gets blamed for whatever happens during his/her time, then we did happen to have 9/11, fake Iraq War, US citizen rights revocation w/Patriot Act, horrible GDP and job growth under "Trickle down theory" tax policy, AND worst financial melt-down since the Depression under his watch.

More worrisome - Romney has 18 of the 24 W foreign policy advisors signed on. And promising to double down on Trickle Down for economic policy. Argh.

Joni - What Mr. Peters does/doesn't know about this mess is anybody's guess. Being a politician, he is capable of saying anything, to any crowd.

This bill may appear to give the banks incentive, but doesn't actually. This bill will just make it appear that our lawmakers are "doing something" despite the fact that what they're doing will be totally ineffective. The banks still have no real motive to keep a homeowner out of foreclosure. Even if the banks don't sell the repossessed property, they get to keep it on their books at whichever "value" they choose to assign it...with no basis in reality (or realty...hahaha).

Erin - No, I'm afraid Peters really IS clueless, if he believes this bill will fix anything. I know very well how the Housing Bubble was blown (and why, and by whom) and what the results have been thus far, and what is likely to occur as a direct result. I can even say with some certainty what NEEDS TO happen, but nobody will like it.

Given the choice of 1) cutting the rate/principal of a loan so the homeowner can afford the payments 2) selling the property and keeping 100% of the proceeds or 3) keeping it on your books at "mark to fantasy" valuation as an "asset" against which to borrow. Banks have been choosing #2 or #3, not #1, and this bill does nothing to change that.

If it was 1999, then Republicans controlled both houses of Congress, and the "Progressives" did not control the agenda. Nothing could have passed only Democratic votes. That Bill Clinton signed the bill, in a time of budget surpluses and a roaring economy where we were on a clear path to eliminating the national debt, proved problematic. "Gaming the system" isn't just for supposed welfare cheats...banks and mortgage lenders took full advantage of every loophole and flaw and poured TRILLIONS of dollars into "investments" that in an earlier era would never have been made.

By the way, I find it odd that people here bemoaning the repeal of Glass-Steagall are at the same time adamantly opposed to ANY aspect of Dodd-Frank, hate the Volcker rule and intentionally conflate TARP and the Stimulus of 2009. One would almost think you were crying crocodile tears with hypocritical concern trolling. But that couldn't be...right?

Dodd-Frank is not perfect -- Republicans and Blue Dogs succeeded in watering it down before it passed, and once the GOP claimed the House they've been even more successful in preventing it from going into effect almost two years after it was signed into law. But it's much better than nothing -- which is exactly what we'll get with Willard "Mitt" Romney. No regulations, no controls, no limits on the power of banks. Certainly no return to Glass-Steagall.

Just a little correction to the blaming of Barney Franks for the repeal of Glass-Steagall. It was pushed by the Fed and Greenspan, in cahoots with Sandy Weill of Travelers Ins. and John Reed of Citicorp, which after merger would become Citigroup Inc. Their proposal was taken by Phil Gramm-R of the Senate Banking Committee, refined further to help repay the banks for their $300 million "donations" over the prior 20 years, and America was officially turned over to the bankers. Franks can be blamed for a lot of things but repeal of G-S is not one of them.

Banks are the real culprits here, arm in arm with politicians of both parties. The R party is well known for their stand on gutting regulations, spending more than dems., and borrowing to help that spending, while the D party is well known for taxing and overspending, and not truly forcing recipients to be accountable for their actions that caused them to need help. Both parties care more about themselves and their ideologies than they do the public or the country. We would be much less of a hate filled society if both parties ceased to exist. Think of how the financial crisis may have turned out if instead of bailing out the too big to fail banks, the homeowners were given a partial bailout instead. It would have been cheaper, whether the citizens deserved a bailout or not, because the TBTF banks sure didn't deserve to be bailed out and yet they were. Peters may be way off base but IMO it is worth at least a try.

It is not the job of the federal government to keep homeowners in their homes. It is not the job of the federal government to redistribute wealth. It is not the job of the federal government to pick "winners" and/or "losers" by deciding who gets modifications, or which banks can offer them.

Not in the Constitution - Not the job of the government.

Jim - RE: "Not everyone who's home is facing foreclosure is "irresponsible"

Let's not forget those who were foreclosed upon illegally with robosigning mills. Many folks whose homes have been paid off for years, or show that there's an mysterious unpaid amount for as little as $2.00. The stories are amazing.

Not only that, but there are hundreds of thousands, if not more, of mortgages with "Origination" issues. Some banks stopped registering deeds and mortgage transactions in national deed databases, and stopped filing the "paper" paperwork with clerks as they kept flipping and bundling mortgages. So, literally, today, there are many, many, many people, banks and clerks who have no idea who owns loans/deeds. Crazy, it's going to take a long time to unwind this mess.

So then there was the big bank settlement (really a pittance) to homeowner's who were foreclosed upon illegally. They were awarded $2,000 each, Wow, that'll get you a new house, eh?

Block checks were sent to States to distribute to homeowners. 15 states have taken their big checks, and took chunks to plug holes in their State's general funds instead of giving all the $$ to those who were wronged and awarded the damages. Walker in WI, one of the worst. But at least that enabled him to say he filled in deficits in time for the recall election. Guess that's all that matters.

Randy - "not the job of the federal government to redistribute wealth"
You're right! That's the job of private companies on Wall Street. ;-) Only half-joking.

As I re-read my comment above, I cannot find where I called any individual a "name". I commented on the obvious, which is that those who wrote replies against the proposal failed to consider all the facts in the matter, which is the very definition of "uneducated" - at least on the subject at hand. If we're going to have to plan out our rhetoric to avoid even the possibility of anyone extrapolating a general statement into a personal attack... you might as well eliminate the comments section.

In that instance, the best solution for the homeowner would be to walk. Take the financial hit, and move on with their life. Let the bank sit on this steaming pile of "asset" and worry about its future disposition.

Sorry, Daryl. Those who put 20% or more down on their houses and paid their mortgages on time every time can hardly be blamed for not being prescient enough to anticipate the decimation of the housing market, nor for being underwater on homes that lost 40% of their value almost overnight. They were merely following the template used for buying homes for the 50 years or so before the meltdown, and had every reason to believe that if they followed the rules, they'd have a safe investment on their hands. "Taxpayer" money? You mean, like the taxes they and everyone else paid into the system? It's about time that politicians see tax dollars for what they are - EVERYONE'S MONEY, and I see nothing wrong with trying to steer some of that back to the hard-working, responsible souls who truly are victims of circumstances beyond their control or future-view. It truly is sad to hear people with Ayn Rand sensibilities tell their neighbors and fellow citizens, "Too bad. I got mine - and you can go to hell".

Jim,

Many people put down much more than 20% and still have taken a significant hit. It is called an investment and sometimes you win and sometimes you lose, why do we expect government to jump in and fix it? It is our tax dollars that pay for these things, we need to stop spending it on special groups and just provide the necessary services we all need with our tax dollars.

Why do you believe government should pick winners and losers?

When government picks winners and losers it is a political decision, not a logical fair one. It is our money they collect from us, then keep some to feed themselves and then distribute the rest of the money to their special group.

To Marty's point, when Gary Peters or any other politician is involved they are spending tax dollars. Do not believe for a second that this does not use tax dollars for this special group. This has been tried several times over recent years and only a few get to participate due to the rules and regulations put in place by the government.

Daryl, proof of the tax dollar involvement is better than a belief. I too believe that in some small font buried in the proposed legislation there is a clause to use tax dollars as a back up to "help the lender" help the borrower. But all I have is suspicion and a belief.
However, still no proof. What I do see is that any profit from future sale is split with the lender. So where is the demonstrable tax payer involvement?