The House of Representatives this week adopted a Republican amendment that would bar the Justice Department from engaging in further mortgage settlement talks without giving bond investors a seat at the negotiating table.

Rep. Scott Garrett offered the measure as an amendment to an appropriations bill that is expected to pass the House. The amendment passed the House by a 238-185 margin, largely along partisan lines.

If the amendment were to become law, it would impact the posture of the Justice Department in any future negotiations with smaller mortgage servicers that did not participate in the recent settlement with the five largest servicers. But because the appropriations bill is unlikely to be approved by the Senate, the amendment represents more of a rebuke by House Republicans than it does a likely change in policy.

The estimated $25 billion agreement, approved last month in federal court, settles claims related to robo-signing and other abuses in the foreclosure process, with much of the money taking the form of relief to homeowners.

After the settlement was announced, investors in mortgage bonds complained that they were left out of the talks, even though servicers will get credit for write-downs of mortgages that are separately owned by investors.

Defenders of the settlement note that the servicers will only be able to write down investor-owned mortgages when their contractual agreements with the investors give them the discretion to make that decision. In addition, the servicers will get more credit under the settlement for writing down mortgages they own than they will for writing down investor-owned mortgages.

But in remarks on the House floor Garrett said that it was wrong for the Justice Department to exclude investors from the settlement talks when they will pay some of the bill.

"They in this process were deliberately left out," the New Jersey Republican said. "They did not have a proverbial seat at the table when the decision was made as to who would foot the bill."

Rep. Chaka Fattah, a Pennsylvania Democrat, responded by noting that the settlement was negotiated not only by the Obama administration's Justice Department, but also by Republican and Democratic attorneys general from 49 states.

He added: "I think the attempt here to separate out those who were seeking a fortune off of the misfortune of others from those who acted on their behalf is wrongheaded."

Garrett shot back that the investors who will pay for some of the settlement are everyday Americans who did nothing wrong.

"They are the pension funds in your district. They are the unions in your district," he said. "They're the retirees in your district."

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