Road Map: Dodd and Democrats Focus on Mortgages

Posted June 16, 2008 at 6:33pm

Talk about awkward. You’re facing allegations that you used your status to get a sweetheart deal on your mortgage at the same time that your landmark housing legislation is scheduled to hit the Senate floor. Ouch.

[IMGCAP(1)]Despite his potential ethics woes, Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) appears ready to power through it this week. After all, helping out embattled homeowners in the middle of a housing slump is one of his party’s top election-year priorities, and Democratic leaders have vowed to complete legislation before the Fourth of July recess, just two weeks away.

Senate Majority Leader Harry Reid (D-Nev.) “would like to have it on the floor as soon as” today, his spokesman Jim Manley said. Manley cautioned that several pieces of the bill were still being worked out and that Reid would only bring it up after a deal has been reached. If the bill does not come up today, Wednesday or Thursday is likely, other sources said.

Regardless, the side story will undoubtedly be the revelations from last week that Countrywide Financial might have given Dodd and Senate Budget Chairman Kent Conrad (D-N.D.) cut-rate mortgages on properties they own. Dodd and Conrad have said via spokesmen that they had no idea they might have been given preferential treatment.

“Everybody is giving both Senators the benefit of the doubt,” a senior Senate Democratic aide said. “But the whole uncertainty of the situation and not knowing how it will play out or how long it will hang around — it certainly doesn’t help the progress of the bill.”

Even the Citizens for Responsibility and Ethics in Washington, which last week called for House and Senate ethics investigations into which Members might have been included in Countrywide’s VIP lending program, downplayed the the timing of the debate.

“Sen. Dodd has to continue to do his job,” CREW spokeswoman Naomi Seligman Steiner said. “The housing crisis isn’t going to take a hiatus while the Countrywide loan controversy continues. … The timing isn’t ideal, but neither is the housing crisis.”

Plus, housing industry lobbyists are stepping up the pressure on Congress to complete the bill within the next two weeks.

“The housing economy is hurting,” said Jerry Howard, CEO and executive vice president of the National Association of Home Builders. “We’ve lost jobs overall for five straight months. It is now up to Congress to break that spiral. Congress quite simply needs to finish the job, and they must do it now before the Fourth of July recess.”

Because the bill has the support of Banking ranking member Richard Shelby (R-Ala.), Dodd and other Democrats are hoping the awkwardness lasts only as long as the bill is on the floor.

“We’re hoping it won’t go very long,” a Dodd spokeswoman said. “Hopefully, it’ll just be a few days this week.”

Any longer on the floor and the delicate Dodd-Shelby compromise might disintegrate — a situation that may lead the duo to discourage amendments.

“There’s an argument to be made [by Dodd and Shelby] that if you tweak even a seemingly small part of the bill, it might upset the whole apple cart,” a consumer housing activist said.

The bill encompasses everything from reforming secondary mortgage giants Fannie Mae and Freddie Mac to encouraging lenders to write down the value of some mortgages in exchange for loan guarantees from the Federal Housing Administration. As of press time, details of the measure were still being worked out, and it was unclear whether Dodd and Shelby would be ready for floor action today.

While most housing activists support the bill, some Senate Democrats are concerned that it does not bring enough relief or liquidity to the housing market in blue states such as California, New York and Massachusetts, where housing costs are higher. Those Democrats are counting on Speaker Nancy Pelosi (D), who happens to be from California, and Massachusetts Democratic Rep. Barney Frank, who is the House Financial Services chairman, to push for that issue to be worked out before the measure heads to the White House.

Kate Ackley contributed to this report.