The truly critical issue the Legislature failed to act on

My colleague Robert Doggett pointed out to me yesterday just how pathetic the Texas Legislature’s efforts to deal with the home foreclosure crisis was this session.

The Texas Legislature failed to take any action to deal with the foreclosure crisis or the predatory lending practices which fueled the crisis we find ourselves in. One reason for this was that the lenders themselves, having taken huge taxpayer bailouts, poured money into political action committees and lobbyists not just at the national level but in Texas as well in their successful effort to block any reform.

When I say the Texas Legislature did nothing to deal with the foreclosure crisis, it is hardly an exaggeration. Before the session Texas Atty. Gen. Greg Abbott proposed an extremely minor extension in the foreclosure process. We endorsed that proposal as better than nothing. But even that proved to be too much for the Texas Legislature. SB 472 by Sen. Estes was characterized as the “AG Bill” but was written with the approval of the lenders. Even with the lenders holding the pen (not one consumer advocate was at the table when the bill was negotiated), the product that they came out with was so poorly drafted and had so many technical problems that it could not be fixed in time for the bill to be passed. (The bill was brought up but the resolution (CCR) was filed too late to be considered before the midnight deadline for legislation last Sunday).

Many other bills related to foreclosure, a number of which we help to write, were not given a hearing in the Senate Business and Commerce Committee. One bill that managed to come over from the House, which offered very minimal improvements to the foreclosure process, did not even get a hearing in Business and Commerce.

Texas has the fastest foreclosure procedure in the nation according to a study conducted by the Texas Department of Housing and Community Affairs. We have a climbing foreclosure rate. When it is so fast and easy to foreclose in Texas, the decision-makers of the national loan servicers factor that in when making decisions about whether to just foreclose on a Texan or to try to help them stay in their home by adjusting the terms of the loans. If our process were a little slower and a little more deliberate like foreclosure processes in other states there would be more of an incentive for lenders to work with homeowners to be able to keep their homes. But even the handful of days that the attorney general’s proposal would have given Texas homeowners prove beyond the ability of the legislature to accomplish in the face of very clever behind-the-scenes maneuvering by the lenders.

The failures of the Texas Legislature this session will result in more foreclosures on Texas families that did not have to happen. These foreclosures will devastate their neighbors, their neighborhoods, the local tax base, drain city services, etc.

As Robert put it in explaining this to me, the Texas Legislature failed to act on one truly critical issue for Texas families and it had nothing to do with voter ID.