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On the trail: Senate Democrats hold their fire on foreclosure mediation legislation

In Economy

1:17 am on Mon, 05.13.13

The effort in the Missouri legislature to abolish local foreclosure mediation ordinances, such as those in St. Louis and St. Louis County, had all the right kind of legislative momentum.

Missouri Senate

State Rep. Stanley Cox and House Majority John Diehl's legislation had unchallenged support from Republican legislators. It was a major priority for the state's banking and real estate industry, two powerful and influential interest groups that opposed the ordinances in St. Louis County and St. Louis. And some Democratic legislators in the Missouri House supported it.

But one potentially potent roadblock could have stopped the bill: a bloc of Democratic senators, many of whom saw the foreclosure crisis in their communities daily. Had they banded together and filibustered, they could have blocked the bill to wipe out these programs championed by St. Louis County Executive Charlie Dooley and St. Louis Mayor Francis Slay.

But that didn't happen -- and Cox and Diehl's bill now sits on Gov. Jay Nixon's desk after a surprisingly small amount of debate. Even proponents of the legislation say they were surprised that the legislation managed to pass relatively quickly.

Some of the biggest opponents of the bill are disappointed about the outcome.

"I'm having a very difficult time with how the Senate works over here," said state Sen. Jamilah Nasheed, D-St. Louis. "I was told that the power of a senator is to be able to filibuster. When we go there, we don't take it to the end. We start out filibustering and then we close out without accomplishing our goals of stopping bad bills." 

Senators interviewed by the Beacon say a number of factors -- including the lack of a "united front" and a perception that the issue affected only St. Louis -- may have prevented a filibuster from coming together But the episode may also be an example of Realpolitik of the Missouri Senate: Sometimes opponents of a bill will hold their tongues if they know a governor is primed to veto.

Scott Sifton
Scott Sifton

"I will tell you that individual senators and sometimes as a minority caucus, our assessment of a likely veto will have a dramatic impact on the extent to which we'll spend floor time on a particular issue," said state Sen. Scott Sifton, D-Affton said. "Which is to say, the more certain we are of a veto, the less likely we are to burn capital by stringing things out."

And while Nixon's administration isn't saying how they'll act on the bill, it's possible that the governor could veto the bill, so validating the senators' decision to hold back. But the senators also took a risk since Nixon could always sign the bill or lawmakers could override his veto.

The target and the targeted

The St. Louis County Council opened up a legal and political can of worms last year when it approved its foreclosure mediation ordinance. St. Louis followed suit a few months later with its own measure.

The ordinances would allow a homeowner in foreclosure to enter into mediation with the lender and a neutral third party. Besides requiring lenders to pay for mediation, St. Louis County’s ordinance would set a $1,000 fine for a “person, firm or corporation convicted of violating any provision.” The city's ordinance is similar, although it would levies a $500 fine for noncompliance.

While advocates of mediation note that the process doesn't automatically stop a foreclosure, they say that it can catch mistakes and may keep people in their homes.

Gina Walsh
Gina Walsh

"Yeah, it's personal to me," said state Sen. Gina Walsh, D-Bellefontaine Neighbors, a major supporter of foreclosure mediation programs. "It's where I grew up. It's where I live now. I grew up in Spanish Lake and I hate to see that happening. Because we all know what happens. The banks don't want those homes. So they take them away. The grass is knee high. They're vacant buildings. Kids get in them. They get hurt or somebody does something nefarious that shouldn't be in there."

But the ordinances' divergence from state foreclosure policy wasn't the only reason it attracted attention, especially from banks and realtors. 

Those two industries strenuously objected, arguing that the ordinances added another layer of regulation and cost. They also claimed the ordinances would have unintended consequences on the region's housing market. Those concerns eventually translated into lawsuits, which are still winding through the courts. Ordinances in both jurisdictions are frozen and are still awaiting court rulings.

Opponents of the programs decided to take the issue to the state legislature, putting forth legislation to abolish St. Louis County and the city's ordinances and prevent other jurisdictions from enacting them.

Stanley Cox
Stanley Cox

"Banks are just like any other business, they're in to make money," Cox said in an interview. "Not to foreclose on people, but make money on their loans. If you add another layer... you've added cost."

And risk. "Businesspeople do risk evaluation," Cox added. "So if there's a higher risk in a community, they're going to add more expense to it -- more fees, more interest -- in order to compensate for this additional risk."

The fastest track

Cox and Diehl's bill passed the Missouri House by 130-24 earlier this year. The legislation attracted support from roughly two dozen Democrats, including House Minority Leader Jake Hummel, D-St. Louis, and Assistant Minority Floor Leader Gail McCann Beatty, D-Kansas City. No Republicans voted against the measure.

But the real fight was in the Missouri Senate, a chamber where a group of senators can block legislation even with wide-ranging support. At least four senators told the Beacon earlier this year that they opposed the bill. That's significant because a group of senators can kill a bill – or force major changes – by a filibuster, in effect talking the bill to death.

But that didn't occur.  While some Democratic senators -- including Sifton, Walsh and Nasheed -- spoke out against the bill, they did not lead a filibuster. After roughly an hour of debate and two unsuccessful attempts to amend the legislation, the bill passed by a 26-7 margin and was sent to Nixon's desk.

The bill's relatively quick passage took the bill's House sponsors, Cox and Diehl, and the legislation's Senate handler -- Sen. Mike Cunningham, R-Rogersville -- by surprise. All three told the Beacon they had expected Democrats to try to talk the bill to death.

Senators interviewed by the Beacon provided some insight on why a filibuster didn't come together. For one thing, the three lawmakers who spoke against the bill were first-year senators -- meaning they still may be learning the ropes of the Missouri Senate.

Nasheed, for instance, told the Beacon that she made a mistake not asking for a roll call vote on her amendment prompting banks that took TARP funding to pursue mediation with foreclosed homeowners.

Jamilah Nasheed
Jamilah Nasheed

"One of the biggest mistakes on the floor was not taking that to a vote so that the hypocrisy can show among the Republicans," Nasheed said. "Because the Republicans were adamantly opposed to TARP. I'm just a freshman. It was just a freshman move. I just wasn't thinking it through."

Sifton thought some lawmakers from Kansas City region "might have viewed this as an issue of greater concern to folks in St. Louis than in Kansas City."

"That's the reality of it," Sifton said. "It wasn't a Jackson County ordinance that we were debating. It wasn't a city of Kansas City ordinance we were debating. It was a city of St. Louis and St. Louis County ordinance. Understandably, it was the St. Louis regional senators that were more likely to be engaged."

And the bill didn't face universal opposition with the Senate's Democratic caucus. Three Democratic senators -- Sen. Paul LeVota, D-Independence, Sen. Ryan McKenna, D-Jefferson Couny, and Sen. Jason Holsman, D-Kansas City -- voted for Cox and Diehl's bill. 

"St. Louis County and its officials really need to be commended for trying to solve a problem locally," said LeVota, who provides leadership development training for a credit union. "But I think (the issue) should be handled on a statewide level. With that being said, if St. Louis County does something that I agree with, Boone County does something is bad or Jackson does something different, it's hard for mortgage companies and other industries … to be consistent."

Backers of the local ordinances note that the General Assembly consistently blocked efforts to take foreclosure mediation statewide. In fact, Cox said such a move wouldn't happen "in this legislature."

"I am sympathetic to the mortgage industry wanting statewide. I get that," said Senate Minority Leader Jolie Justus, D-Kansas City. "But the reality is that we want statewide, but then they block it statewide. And so, the way that I have handled several things was to say if the state won't give it to us, let's go back and do what we need to do locally. And I'm willing to do that. And if that's unconstitutional, then let the courts sort that out."

On Nixon's shoulders?

But a number of senators who voted no on Cox and Diehl's bill say the bigger reason why a filibuster didn't emerge was because they received signals from Nixon's office that the governor would veto the bill anyway.

Maria Chappelle-Nadal
Maria Chappelle-Nadal

"The governor sometimes tells you what he's going to do. But most of the times he doesn't," said Sen. Maria Chappelle-Nadal, D-University City. "And that is one of the disconnects that we have. In this circumstance, his office relayed that he was going to veto it. And so, that gives us that opportunity to select on what we're going to filibuster."

Nixon spokesman Scott Holste told the Beacon in an e-mail that "we generally refrain from commenting on pieces of legislation before the governor acts upon them, and that will the case with this bill as well." Nixon himself said on Friday that he hadn't had a chance to look at the legislation.

Both Sifton and Chappelle-Nadal said choosing when to filibuster is also a matter of picking the right battles in a chamber where Democrats are outnumbered.

"You need to know the temperament of the majority," Chappelle-Nadal added.

Nasheed said if Democrats hadn't received signals that Nixon would veto the bill, "it would have been an all-out-war."

But she still expressed some disappointment of how the events of last Monday night unfolded.

"I truly believe that a lot of times, the minority party they will say 'look, why do we want to waste our time on this. The governor is going to veto it anyway,'" Nasheed said. "And that's what I hear often.  Let's not waste a lot of fighting power on the floor. Let the governor veto it."

"The way that I feel, we're here to fight," she added. "I mean we're in the minority and we have to stand up for the people. The people have to see them fighting for them."

While Cox and Diehl's bill passed with veto-proof majorities in both chambers, it's an open question whether the measure would receive an override attempt.

Some Democratic lawmakers interviewed by the Beacon contended that Republicans may be hesitant to override a potential veto in September, mainly because they may not want to bring more attention to a bill that could be construed as a sop to the banking or real estate industry.

But Cox strongly disputed that theory.

"I would think we would override it, that would be my guess," Cox said. "I understand how you can dogmatically describe the opposition to it. You're getting people out of your homes or you're making people homeless or whatever you want to say. That never really caught on. And really outside those two counties who have passed local ordinances, it's an issue that doesn't mean anything to anyone else in the state."

Diehl said, "You can have all these talking points and all these alarmist type of statements, but when you really dig down and think about what you're doing on the policy of it, banks just won't lend in those counties if they don't have reliable remedies."

But Chappelle-Nadal said that if supporters do try to override, Democrats such as herself will pursue a much different strategy.

"I will tell you, easily I can do four hours, 10 hours on my own," said Chappelle-Nadal, referring to her ability to filibuster. "And I think that the proponents of the legislation need to be very careful. And you need to step very carefully on this particular issue."

On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.

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