Home Legislation Issues Page Homeownership and the Foreclosure Crisis

On the Issues: Homeownership and the Foreclosure Crisis

Homeownership has always been a core part of the American dream.  Unfortunately this dream is falling out of reach of many American families, particularly those in South Florida. In 2008, there were more than 100,000 home foreclosures in South Florida.  This year, that number could increase by 50% to 100%.  Not only are the increasing numbers of foreclosures causing homeowners to lose their homes, but our communities are also seeing their property values plummet as a result.   If you are a homeowner facing possible foreclosure, please visit these links to learn about what assistance may be available to you.

In the 111th Congress, I have advocated for legislation that will help families stay in their homes. I have strongly supported efforts to encourage loan modifications for responsible homeowners struggling to make their mortgage payments.  As part of this effort, I supported passage of H.R. 1106 -- “The Helping Families Save Their Homes Act of 2009” – which will expand coverage of the HOPE for Homeowners Program to encourage lender participation and increase the number of homeowners eligible to participate in the Program.  The HOPE for Homeowners Program assists homeowners that are having difficulty making their mortgage payments with refinancing into a new loan insured by the Federal Housing Authority.  To encourage participation in the Program, the legislation will reduce the fees for lenders and homeowners, and provides up to $1,000 payments to servicers for each successful loan refinancing.              

The collapse of the sub-prime mortgage industry demonstrated the unconscionable actions of predatory mortgage lenders who pushed unaffordable mortgages onto many unsuspecting homeowners.  I firmly believe reforms need to be made to the mortgage lending industry.  On May 18, 2009, my colleagues and I passed the “Fraud Enforcement and Recovery Act of 2009” to expand our federal criminal laws to cover the actions of predatory mortgage lenders.  In addition, we recently passed with broad bipartisan support H.R. 1728, the “Mortgage Reform and Anti-Predatory Lending Act.”  This legislation will make fundamental reforms to our nation’s mortgage lending industry.  Under H.R. 1728, lenders will be required to ensure that borrowers can repay the loans they are provided.  If a lender fails to ensure that the borrower can repay the loan, then the lender will be held accountable to the borrower for rescission of the loan and any costs incurred by the borrower relating to the rescission.  Important protections are also provided to renters renting a home that is being foreclosed to provide them with adequate time to relocate.            

Last July, H.R. 3221 -- the “American Housing Rescue and Foreclosure Prevention Act of 2008” – was passed by Congress and signed into law by the President.  A core component of this bill provides mortgage refinancing assistance to at least 400,000 families by permitting at-risk borrowers to refinance into lower-cost Federal Housing Authority (FHA) insured mortgages they can afford.  Far from a “bailout,” the program requires lenders to write down troubled mortgages to affordable fixed-rate loans, thus realizing substantial losses.  In addition, H.R. 3221 gives Fannie Mae and Freddie Mac the authority they need to provide immediate assistance to Americans living in high cost areas by raising the permanent loan limit from $417,000 to $625,000.  Tax breaks of up to $7,500 also are provided to first-time home buyers; and protections are provided to veterans at risk of losing their home to foreclosure.  Moreover, a high number of foreclosures in a neighborhood can cause a decline in the value of other homes in the area, higher crime rates in the neighborhood, and decrease local revenues for schools, fire departments, police departments and other important community services.  H.R. 3221, therefore, provides $3.9 billion to communities that have been hit hard by the housing crisis.  These funds will enable communities to purchase and rehabilitate vacant and foreclosed properties.   

To ensure that affordable rental housing is available to families losing their homes to foreclosure and to those most financially capable of buying a home, we also passed the National Affordable Housing Trust Fund Act, which establishes a federal trust fund for the creation and preservation of affordable housing.  Furthermore, the House passed legislation last year to improve the regulation of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. 

I believe that it is of the utmost importance to examine the effects of the sub-prime loans and predatory lending practices on foreclosure rates.  To this end, the U.S. House of Representatives will continue to hold hearings on how lessons from the mortgage crisis should translate into comprehensive reform of our financial regulatory system.    Ultimately we need to provide greater transparency for institutions and markets and provide better protections for consumers and investors.

Useful Links for Homeowners:

http://www.financialstability.gov/
View up-to-date details on the Obama Administration’s policies to assist homeowners at risk of foreclosure, to rescue the financial industry, and to restart lending by banks to consumers and small businesses.

http://www.makinghomeaffordable.gov/
The Obama Administration has put into place the “Making Home Affordable” program which gives homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac a chance to refinance their mortgage.

www.fha.gov
This site allows a borrower to enter their city, state and zip code to locate an FHA-approved lender in their area.  Borrowers also can contact 1-800-569-4287, the HOPE hotline, to get the names of HUD-approved counseling entities in their area.  HUD-approved counselors can assist borrowers at risk of foreclosure with learning more about their options.  In addition, a HUD-approved counselor can help represent a borrower in negotiations with their lender.

www.hpfonline.org or 1-888-995-4673
This is a service that provides HUD-approved counselors to work with homeowners that may lose their home to foreclosure.  The counselors will help the homeowner set up a plan to keep their home from being foreclosed.

http://www.hud.gov/ -
The Department of Housing of Urban Development provides information addressing the programs and services that are available for homeowners struggling to make their mortgage payments or in danger of losing their home in foreclosure.

https://www.mers-servicerid.org/sis/
This online resource can help homeowners identify the company that is handling their mortgage.  The phone-based MERS Servicer Identification System can also be contacted at 1-888-679-6377.