New Senate Proceedings: The Foreclosure Prevention Act of 2008

By
Real Estate Agent with Your Castle Real Estate, Inc!

I just received this from Senator Ken Salazar (D-CO) with regard to what the US Senate is workig on regarding helping people out of the foreclosure pandemic.

 

 

U.S. Senator Ken Salazar

Member: Finance, Agriculture, Energy, Ethics and Aging Committees

 

2300 15th Street, Suite 450 Denver, CO 80202 | 702 Hart Senate Building, Washington, D.C. 20510

 

 

For Immediate Release

Friday , February 22, 2008

CONTACT:Stephanie Valencia - 202-228-3630
Cody Wertz 303-350-0032

 

Sen. Salazar Pushes For Urgent Action to Alleviate Colorado's Housing Crisis
Announces support for Foreclosure Prevention Act that will be considered in Senate this week

DENVER, CO - As the rising rate of home foreclosure threatens thousands of Colorado homeowners, United States Senator Ken Salazar held a press conference today at Brother's Redevelopment, Inc., a local housing assistance agency that houses Colorado's Foreclosure Hotline, calling for urgent action to address the housing crisis in America. At today's press conference, Senator Salazar announced his support for The Foreclosure Prevention Act of 2008 (S. 2636), which was recently introduced in the Senate to help keep families facing foreclosure in their homes, help communities already harmed by foreclosure to recover, and help families avoid foreclosures in the future. The Foreclosure Prevention Act of 2008 represents a comprehensive approach toward addressing the housing crisis, and is scheduled to be considered on the floor of the United States Senate next week.

"The housing crisis in our nation is putting the American dream of homeownership in jeopardy," said Senator Salazar. "The housing crisis has had a significant impact on all Coloradoans, and merits urgent action. When we return to the Senate next week, we will continue the effort to reinvigorate our Nation's economy by passing this legislation and taking aim at the crisis that has been central to our Nation's economic woes."

The housing crisis has hit Colorado especially hard. The rising number of foreclosures have had a direct impact on home values in the state; according the Case-Shiller home price index, housing prices in the Denver area are down 5 percent from their peak in August 2006, and further declines may be on the horizon. In 2007, Colorado ranked 5th in the nation in foreclosures and in Colorado in 2007 foreclosures were up 30 percent over 2006 and 140 percent over 2005. During September of last year, 1 in every 376 houses in Colorado was in some stage of foreclosure.

In addition, Colorado's home building industry is suffering, and has responded to the economic situation by cutting production -- Colorado housing starts have declined by 36 percent since 2005. These statistics are especially troubling given the importance of the home construction to the Colorado economy. The National Association of Home Builders estimates that, in 2002, 6.77% of Colorado's Gross State Product (GSP) was directly accountable to home building, and another 12.71% was accountable to housing services, for a total housing contribution of 19.48% of GSP.

The site of today's press conference, Brother's Redevelopment, Inc., is a local non-profit housing assistance agency that also houses the Colorado Foreclosure Hotline, which has provided an increasing number of struggling Colorado homeowners with information on a borrower's options when facing foreclosure. Their foreclosure assistance hotline has (877-601-HOPE) provides an easy way for any homeowner in danger of delinquency or foreclosure to talk directly with a trained, professional housing counselor. Counselors offer free assistance to help homeowners understand their options, negotiate solutions, and find the best resolution for their particular circumstances. The hotline has been an enormous success; to date, more than 29,000 callers have phoned the Hotline seeking assistance or information-more than 1,700 per month.

To view the charts Senator Salazar used at today's press conference to highlight the housing downturn, click here and here. For more information on the Foreclosure Prevention Act of 2008, see below.

The Foreclosure Prevention Act of 2008 (S. 2636)
The Foreclosure Prevention Act of 2008 will keep families facing foreclosure in their homes, help other families avoid foreclosures in the future, and help communities already harmed by foreclosure to recover.

I. Help Keep Struggling Families in Their Homes
Increase pre-foreclosure counseling funds ($200 million) - This additional funding will help housing counselors continue their outreach to families at risk of foreclosure. These added funds should assist as many as 500,000 additional families connect with their mortgage servicer or lender to explore options that will keep them in their homes.

Allow Housing Finance Agencies (HFAs) to Issue Bonds for Refinancings (increase current cap by $10 billion) - This provision will allow housing finance agencies to use proceeds from mortgage revenue bonds to refinance subprime loans, to provide mortgages for first-time home buyers, and for multifamily rental housing. Additionally, the increased lending activity supports economic growth by creating new jobs, generating federal, state, and local revenues, and inspiring home-related consumer spending.

Change Bankruptcy Code to Allow Judge to Modify Mortgage of Debtor - This title could help more than 600,000 financially-troubled families keep their homes by allowing them to modify their mortgages in bankruptcy. It eliminates a provision of the bankruptcy law that prohibits modifications to mortgage loans on the debtor's principal residence for homeowners who meet strict income and expense criteria. With this change, primary mortgages are treated the same as vacation homes and family farms.

II. Help Communities Harmed by Foreclosures Recover
CDBG Money for Purchase and Rehab of Foreclosed Properties ($4 billion) - Homes that have been foreclosed and are sitting unoccupied on the market can sap neighboring homes of their value. This provision allows localities with the highest foreclosure numbers and rates access CDBG funds to use toward purchasing these properties, rehabilitate them if necessary and rent or re-sell them. Productive occupancy of foreclosed homes will help stimulate economic activity and help prevent further loss of home equity in struggling neighborhoods.

Net Operating Loss Carry Back from Finance Stimulus Package - For companies losing money in this economic downturn, this proposal extends a provision that allows corporations to apply (or "carry back") their net operating losses to tax returns from prior years in which they were profitable, and receive any applicable tax refunds. Under current law, companies are allowed to carry their losses back only two years - this proposal would extend that period to five years for losses incurred in 2006, 2007, and 2008, effectively allowing companies to average out their good years and their bad years for tax purposes. This is particularly helpful for "boom-and-bust" industries such as the home construction industry.

III. Help Families Avoid Foreclosures in the Future
Simplified Disclosure on Mortgages Documents -This provision would amend the Truth-in-Lending Act and improve the loan disclosures given to homebuyers not only when they apply for a home purchase loan, but also when they refinance their home. The measure would require: (i) firm disclosure of the terms of the mortgage loan within 3 days of application (and not later than 7 days before closing); and (ii) the maximum loan payment be disclosed, not only at application, but also seven days before closing. Finally, this provision would clarify that lenders are subject to statutory damages for violations of Truth-in-Lending disclosure provisions and increase the damages for mortgage violations.

 

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Comments (2)

Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

 One item in your post stood out like a big thorn. You did not mention anything one way or the other so I feel that I should point out this one sticky point. When it comes to giving a Bankruptcy Judge the power to rewrite the terms of the mortgage or note, you are playing with fire. We saw what happened to the Commercial Paper markets after the sub prime problems broke out into the public news. The trust in commercial paper disappeared for a short period, and the money derived from it dried up.

If the terms of the note or mortgage can be changed by a third party ( the Judge) the trust backing the those pieces of paper will disappear again, but this time it will not return until until the ink used to make these document is permanent and not tampered with by any body.

I'm not a big fan of big government getting involved in all parts of our lives. I feel that the free market system can find the the fair market value for a home. If the houses need to drop in value to create a market the so be it. Having the Government step in and keep home owners in a home they can afford and then messing with the investor the loaned the money so that  they could buy a house is hurting both parties.

Feb 28, 2008 02:55 PM
Lou Farris
Your Castle Real Estate, Inc! - Highlands Ranch, CO

Chuck,

I am gald to see that the way I posted the article had the exact effect I was hoping for, so far. I am a fiscal and governmental ultra conservativce. I believe that our public officials should be paid based on how well they manage the public trust, and the affairs of state, and not on tenure, or be allowed to increase their own pay at will.

I also believe that the income tax problem could be easily cured: ban the income tax! It was initiated under FDR as a temporary workout to the Depression. A five year program of bloated bureaucracy has been with us since 1929. How's that for temporary?

We have to keep a strong military, but I haven't figured that part out without some tax system. Perhaps the states charge a flat or percapita tax, based on population. The statews can end income taxes, too. Make all public officials at stte and lower levels volunteer posts, without term limits. You'll then get those who truly have a passion to serve the public, and I am certain they will be effective and efficient, becuase they are working for free. That will put the servant back in civil servant.

At any rate, thanks for pointing out your thorns. I hope to see others join in the discussion soon.

Feb 28, 2008 03:05 PM