Here is some background on the Constitutional struggle going on behind this proposed legislation. It is in the form of an email I sent to a reporter:

Hi:

I read your article on Citi and mortgage modification. However, I don't think you understand its legal ramifications. May I step back a few steps and suggest a few questions you might want to ask Schumer?

Ever since West Coast Hotel v. Parrish (1937--John Roberts had to sign off on its doctrine IN WRITING: it's online), the Constitutional regime has been as follows:

policy is Constitutional if it is rationally related to a legitimate government purpose.

Thus, with a few exceptions (noted below) policy is subject only to "minimum scrutiny." That is why the current Constitutional regime is called the scrutiny regime.

This has meant two things:

1. the political system has nearly absolute control over nearly all facts;

2. individuals have virtually no individually enforceable rights over any facts.

That is true of housing. The reason homeowners can get foreclosed is because they cannot assert any right against current policy which says: if you can't pay your mortgage, you get foreclosed.

Housing enjoys only minimum scrutiny, as the Court found in Lindsey v. Normet (all these cases listed here are online).

OK, what are the exceptions? Certain facts are taken OUT of the political system and virtually absolute power over them is given to the individual. These are known as "important" facts. What are important facts? The test, laid out in West Virginia v. Barnette, is whether a fact is a fact of human experience which does not change no matter what attempt is made to change it.

What is an example of an "important" fact? Exercises of religion, which were removed from the political process in West Virginia. It is virtually impossible for government to attempt to change an exercise of religion (such attempts are subject to "strict" scrutiny--which says that government basically has to argue that the government will collapse unless it is allowed to attempt to change an exercise of religion: government never wins this argument).

Protected speech is another important fact. So is racial and gender legal equality.

Is housing an "important" fact? People have been arguing it for years, but the Court has never found it to be so. Now the question is, if judges can modify mortgages, are we moving toward recognizing that housing is an important fact?

For example, the proposal says JUDGES can modify mortgage terms. But where does that request come from? It comes from the homeowner. So, the legislation is giving homeowners power they did not have before. Thus, the legislation RAISES THE LEVEL OF SCRUTINY for housing with respect to home mortgages.

The reason you are seeing opposition is that this immediately raises other questions:

1. Are there analogous situations with regard to rental agreements, such that renters would also have the right to ask the Court to alter housing leases? After all, Bair at FDIC doesn't want to remove renters renting foreclosed houses. So, combining her policy with this new legislation, aren't we saying that the level of scrutiny for housing is also being raised with respect to renters?

2. And if the level of scrutiny for housing is being raised with respect to mortgage terms and rental agreements, with respect to what other, analogous aspects of housing-related contracts, or housing itself, or health and welfare regulation relating to housing, is the level of scrutiny being raised?

So this is why what is going on in housing policy is so momentous. The stakes are high: are we leaving the "scrutiny" regime behind?

I think so. You might want to read online an interesting essay about the history of our Constitutional regimes: G. Edward White (University of Virginia Law School), "Historicizing Judicial Scrutiny."

It is VERY important to note that, as individually enforceable rights with respect to facts, are increased, the political system's control over the MONEY relating to those facts, decreases. Appropriations increasingly are tailored to harmonize with the right. The political system is worried about losing control over government expenditure.

Housing is not the only fact with respect to which public opinion is demanding more individually enforceable rights. I studied this phenomenon in connection with the opposition to eminent domain in my book The Eminent Domain Revolt (New York: Algora 2006).

So anyway, you should ask Senator Schumer and his staff whether the proposed legislation in any way raises the level of scrutiny fo housing, or, does it increase individually enforceable rights in housing.

If they strenuously deny that it does any such thing, then ask whether it does not give the homeowner the right to request a change in mortgage terms.

Cheers,
John Ryskamp

If they are only going to lower interest rates I don't see how that would help. If people's homes are only worth half what they paid then they'll have to adjust the mortgage to the new appraised value of the home otherwise it won't work out.

Unfortunately, Mr. Schumer is an attention grabbing, borderline idiot who almost singlehandedly brought down IndyMac Bank, and who now seems to be proposing perhaps well-intentioned, but unworkable legislation to save defaulting borrowers. The only thing that will save them or our economy is more jobs, better paying ones, and increased real estate values. Can Washington handle that?

It looks like Schumer is trying to draw attention away from the fact that he is probably the biggest crook in the country responsible for the mortgage crisis by forcing Congress to deregulate his cronies in Wall Street. He received $250 million in donations from the Wall Steeet gang. It is Payoff for letting them go on deregulated to put thier leveraged derrivatives together. He let junk paper be rated AAA to unknowing investors. As he beleives what is good for Wall Street is good for New York, and his democratic constituents. How does he get away with it? Is there anybody that should be making sure this crooked business does not go on? Where are the watchdogs? It is scary to realize the big money people are all idiots and crooks. Where are the regualators? How does Madoff pull off a scheme stealing $50 Billion whithout regulators knowing about it? How can we trust any financial istitution anymore knowing nobody is looking out for our money. Senators like Schumer are helping the crooks steal our money.

Re: Economic Stimulus Package

As an example: You are actually voting for $millions to Acorn (an obvious payback). Explain to me how that could possibly stimulate the economy.

Diane Corr
U.S. Citizen