Sen. Norm Coleman (R-MN) wants to have it both ways on the subprime mortgage, home foreclosure crisis. He wants to bail out the banks who either made the subprime loans or own them now, but wants everyone to think he's looking out for the people who in danger of losing their homes. Norm has co-authored the HOME Act which would allow banks to get homeowners retirement assets before they are forced into bankruptcy. The HOME Act would allow homeowners facing foreclosure to raid their retirement accounts to pay off outstanding mortgage payments. Unfortunately, many homeowners don't have retirement assets and they'd have to pay it all back within 3 years or face severe penalties. Since banks can't get someone's retirement assets if they declare bankruptcy, its just a ploy to help the banks gain access to embattled homeowners money.

But Norm doesn't want you to think about that. He wants voters to see him as a champion for the little guy despite all the evidence to the contrary. Yesterday he held a conference call with Republican bloggers.

Finally, Sen. Coleman is working diligently on the mortgage crisis. He's opposed to Sen. Durbin's "cramdown" approach. Instead, he favors making available fixed rate mortgage money, which the homeowner would have to repay. It would just eliminate the exhorbitant payments they're currently getting buried by.

He isn't in favor of bailing out speculators who simply got stuck while trying to make money on the housing market. I agree with that. People that make commitments while trying to make money know that there's risks involved. If they get hung out to dry, that's part of the inherent risk involved in speculating.
[emphasis added]
(Let Freedom Ring)

This is the opposite of what Norm's HOME Act will do. Has Norm flip-flopped? Or is he just posturing? Here's what the responsible adults in the Senate are proposing.

Hundreds of thousands of homeowners would be able to modify their mortgages in bankruptcy to avoid foreclosure if legislation offered by United States Senator Dick Durbin (D-IL) were signed into law.

The provisions of Durbin's bill have been folded into the Democratic foreclosure prevention package introduced last week and scheduled to be debated when the Senate reconvenes the week of February 25.
...
"The law should give American families facing foreclosure the opportunity to negotiate a workout on their mortgages. This bill may help them reach a degree of financial stability -- even when the market cannot," Durbin said. "Small changes to an outdated bankruptcy code could help over 600,000 at risk families keep their homes, while affordably paying back their obligations. We should be giving families every reasonable tool to ensure they can keep a roof over their heads."

Today, virtually every type of personal debt, including vacation homes and family farms, can be restructured in bankruptcy with the exception of mortgages on a primary residence. This exception dates to the 1970's, when most mortgages were fixed rate, long term agreements between local bankers and their neighborhood customers.

The mortgage market has changed considerably since the 1970's, such that mortgages on primary residences are often now the primary cause of financial distress. This bill would help the bankruptcy code catch up with this shift. According to the Center for Responsible Lending, approximately 638,000 families - over 25% of those at risk - would save their homes under Durbin's bill.

To help families save their homes, the Durbin bill would:

• Eliminate a provision of the bankruptcy law that prohibits modifications to mortgage loans on the debtor's primary residence, so that primary mortgages are treated the same as vacation homes and family farms.
• Extend the time frame debtors are allowed for repayment, to support long-term mortgage restructuring.
• Waive the bankruptcy counseling requirement for families whose houses are already scheduled for foreclosure sale, so that precious time is not lost as families fight to save their homes.

To further help families get back on their feet financially as they go through bankruptcy, the bill would also:

• Combat excessive fees that are sometimes charged to debtors in bankruptcy.
• Maintain debtors' legal claims against predatory lenders while in bankruptcy.
• Reinforce that bankruptcy judges can rule on core issues rather than deferring to arbitration.
• Enact a higher homestead floor for homeowners over the age of 55, to help older homeowners who are fighting to keep their homes as they go through bankruptcy but live in states with low homestead floors.
• Reinforce that consumer protection claims are still available in bankruptcy.

(Sen. Dick Durbin's website)