New Housing Bill Will Force Loan Modification
Now this is why I LOVE Active Rain! I'm not into political posts as I try to stay as far away from them as possible but, this one brought about some excellent discussion. As I commented on her post, I'm ambivalent about this--on one hand, I want to see our nation free of this housing crisis--on the other, I'm not into governmental involvement in personal or business contracts. Yes, regulations are needed but, where do we draw the line and how swiftly will the new policy be taken away should the government so choose?
The comments on her post are quite insightful and as I read one, I was nodding my head, then the next opposing view, I was nodding as well! Thanks Claudete for posting this!
Four senators are putting their muscle behind a new housing bill intended to prohibit lenders operating in the U.S. from foreclosing on home owners without first having discussed reasonable modification options with the borrowers.
The bill, called the Preserving Homes and Communities Act is being sponsored by Rhode Island Senator Jack Reed, Illinois Senator Dick Durbin, Jeff Merkley of Oregon and Sheldon Whitehouse of Rhode Island.
Under this bill, lenders will be forced to the negotiating table under the threat of stiff fines and other legal penalties.
All lenders will be required to perform what the bill terms as a "net present value" test for all seriously delinquent borrowers. The test would be a financial analysis weighing the benefits of a modification of loan terms against the benefits of foreclosure.
For borrowers who do not fit into this program, the bill would create a multi-billion national fund for states to make loans or grants in order to prevent foreclosures.
The senators' rationale behind the creation of this bill is that they are frustrated with the slow pace of current loan modification programs and feel that they are not keeping up with the record numbers of foreclosures this year.
"Voluntary efforts to keep families in their homes have failed," said Durbin. "This bill will force lenders to modify qualified mortgages rather than letting them move quickly to foreclosure, which destroys households and neighborhoods."
The act will also set up a mortgage payment assistance program to provide money to state housing agencies to assist people who have lost income and face the prospect of foreclosure.
The most significant aspect of this bill would be to create "mandatory mediation" requirements forcing lenders to allow some mediation efforts between them and their borrowers before being able to file foreclosures against home owners.
This proposal will, no doubt, be met with opposition by banking and mortgage lending groups. It is, however, currently favored to be supported in the House.
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446 - E-mail
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Shrewsbury, Sherborn, Southborough, Sudbury, Wayland, Westborough
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