New Housing Bill Will Force Loan Modification

Reblogger Christianne O'Malley
Real Estate Agent with RE/MAX Realty Affiliates BS.143506

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

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
2,300,879
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Loan modification that is timely and doable for the both sides should be attempted prior to a foreclosure.  Good re-blog.

Oct 07, 2009 04:17 AM #1
Rainer
6,690
Jim Steccato
Keller Williams NJ Metro Group - Cedar Grove, NJ

All this government interference in these matters I just don't know anymore.

I'm torn, I hate hearing these stories of personal tragedy but at the same time the government just seems to be prolonging the agony.Almost no-one qualifies for the loan mods and as someone said earlier, "they just default on the new loans".If your struggling it doesn'tmatter you have to destroy your credit before they'll even look at your situation meaning you have to be at least 3 months behind on your payments its just crazy to me.Why not lend a hand before it goes critical? You can prove your hardship without getting behind 3 months,but this isn't even the problem.

I really am coming to the conclusion that all these bad loans just need to collapse and we need to clear out the foreclosures. It sounds harsh but I really think this is just dragging out an inevitable conclusion to this mess.The government doesn't want to be honest and tell us all how much trouble we are really in.They just keep spending ,borrowing and printing money.Inflation is going to skyrocket because they keep debasing the dollar and even though the inflation will also inflate the value of the home you own you wont be able to sell it because rates will inevitably go through the roof to compensate for monetizing our debt.

Let the bottom fall out I say and we'll at least know where we stand.Even the rates we see are artificially being kept low there is no economic reason they should be where they are  and the longer they stay this way the higher they will have to rise to combat the inflation that's coming.

The Tax credit although it has boosted my business this year I think needs to expire they have also created an artificial bubble with that,Anyone see the lastest stats on the cash for clunkers situation?Sure sales were boosted while the program was active but sales have fallen through the floor.Are we making sales this year that would have been there next year because of the credit? I believe so.We cant keep this tax credit going forever after all its all of us who are paying for it. We are using our own money, all be it our future incomes because we keep borrowing the money to pay for the program from China or just printing the money and devaluing our own currency.

Hold onto your hats people the Sh*t is going to hit the fan!!

 

Oct 07, 2009 04:46 AM #2
Rainmaker
262,234
Christianne O'Malley
RE/MAX Realty Affiliates - Reno, NV
Exceptional Service - Delivering Results in Reno!

Judi - Thanks for your kind words.

Jim - I agree with you 100% on the inflation and devaluing of the dollar remarks. I wish there was more of an incentive with the big banks to do something, but there isn't and there's a good reason. The loans they make are 'insured' thanks to the Federal Reserve. The banks today have gotten big enough that if one fails, we're hosed, so instead they go to Big Daddy (government) to get a bailout. I've thought more than once that perhaps I ought to move my accounts out of my small local regional bank because it could fail and I could get burned...no one is saving the small institutions, only the big ones get saved. We are watching nationalization of every industry in our country. Hail socialism or else do something about it. Scary times, indeed.

Oct 07, 2009 04:52 AM #3
Rainer
6,690
Jim Steccato
Keller Williams NJ Metro Group - Cedar Grove, NJ

SideNote:

Im not just trying to be negative just trying to be prepared to understand the possibilities and know how to set up my future business model,it's going to change for us all.

Oct 07, 2009 04:53 AM #4
Rainer
6,690
Jim Steccato
Keller Williams NJ Metro Group - Cedar Grove, NJ

Judi,

We should, do something about it and we as Realtors can. I for one, refuse to hail Socialism I'd rather die first!!

You know we have to ability to enlighten the people that we meet everyday.Not bashing them over the Head with it but just encouraging that almost guaranteed feeling they have in the pit of there gut that something just isn't right here.They feel it we all do.

Oct 07, 2009 04:58 AM #5
Rainmaker
262,234
Christianne O'Malley
RE/MAX Realty Affiliates - Reno, NV
Exceptional Service - Delivering Results in Reno!

Jim - I certainly don't take your post as negativity, rather I think it's realism. We - as a collective country - need to take off the rose-colored glasses that were passed out at some time in the recent past and realize our future and our children's future is being leveraged for the super-rich. The things that have happened in the last 12 months have - by and large - accentuated the chasm between the haves and have nots. I am hopeful for a public revolt in the mid-term elections...

Oct 07, 2009 05:16 AM #6
Post a Comment
Spam prevention
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?

Rainmaker
262,234

Christianne O'Malley

Exceptional Service - Delivering Results in Reno!
Ask me a question
*
*
*
*
Spam prevention

Additional Information