New Housing Bill Will Force Loan Modification

Reblogger Paddy (Patricia) Pizappi
Real Estate Agent with Better Homes and Gardens Rand Realty

 

This could be a huge step in the right direction for our housing mess.  I am hearing of many homeowners who have been seeking relief and become frustrated by banks who refuse to renegotiate.  We need to stem the tide of foreclosures and keep people in their homes.  Thanks for this information Claudette.

 

Original content by Claudette Millette

loan modification paperFour 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. 

  Subscribe to my blog

Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446  - E-mail    

Learn More about Massachusetts Home Buyer Representation - Greater Boston and MetroWest Massachusetts -  Serving Massachusetts Home Buyers Since 1992 

  Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Shrewsbury, Sherborn, Southborough, Sudbury, Wayland, Westborough    

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Mortgage / Finance
Groups:
Hudson Valley Real Estate and Mortgage Professionals
POSITIVE ATTITUDE for the Weary Soul
"Whacked"!!!
EXPRESS WITH WORDS AT ACTIVERAIN
Blogs Happen...
Tags:
preventing foreclosure
loan modification
pending legislation

Spam prevention
Show All Comments
Rainmaker
459,223
Kim Boekholder Utah Real Estate
Results Real Estate 801.580.5624 - Draper, UT
Broker, Results Real Estate

Wow I hadn't heard of this before.  Thank you for posting it.  It will definitely be interesting to follow and see what happens to it and how it changes and morphs before passing,,, if it does.  I currently have 4 families that are considering short sales who also have loan modifications "in process" but haven't heard anything from their banks about the loan mod in months.  They are going under and are desperate.  It would be great it something happened so the banks answer in a timely manner  but also help the ones that need help, like it was set up to do.  My 4 families are all still paying their loans but won't be for long.  The loan modification would have made a huge difference to them and still could if they get it through.  Keep us posted, thank you

Oct 07, 2009 01:46 AM #1
Rainmaker
459,223
Kim Boekholder Utah Real Estate
Results Real Estate 801.580.5624 - Draper, UT
Broker, Results Real Estate

Wow I hadn't heard of this before.  Thank you for posting it.  It will definitely be interesting to follow and see what happens to it and how it changes and morphs before passing,,, if it does.  I currently have 4 families that are considering short sales who also have loan modifications "in process" but haven't heard anything from their banks about the loan mod in months.  They are going under and are desperate.  It would be great it something happened so the banks answer in a timely manner  but also help the ones that need help, like it was set up to do.  My 4 families are all still paying their loans but won't be for long.  The loan modification would have made a huge difference to them and still could if they get it through.  Keep us posted, thank you

Oct 07, 2009 01:46 AM #2
Rainer
295,550
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

News to me - It is sad that lenders can't modify their own loans to make things work, even without government intervention. I must be missing something, but even a rate of 3% with someone paying a mortgage is better than a short sale or foreclosure.

Oct 07, 2009 02:12 AM #3
Ambassador
2,758,601
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

Wow Paddy, this is interesting. I have often thought that the process was moving too slow. Thanks for sharing...

Oct 07, 2009 02:15 AM #4
Rainmaker
1,317,601
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I would think that lenders would do this voluntarily... It only makes sense to work with buyers.  It is very costly to foreclose... I am sure there are some legal ramifications, but saw so much harm to properties that sat through the New Hampshire winter, that by the time they buyer saw them in the spring, they had severe damage often in the thousands of dollars...

Oct 07, 2009 02:29 AM #5
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
342,445

Paddy (Patricia) Pizappi

Real Estate Associate Broker Hudson Valley NY
Ask me a question
*
*
*
*
Spam prevention

Additional Information