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House Addresses Foreclosures (Floor Amendments)

February 25, 2009 - by Donny Shaw

The House of Representatives on Thursday will place their vote on a major housing and mortgage reform bill, the Helping Families Save Their Homes Act, that has been in the works for months. This is the “cram-down” bill, which would allow bankruptcy judges to modify mortgages for homeowners facing foreclosure. It’s basically the bill that was negotiated with Citigroup back in January.

The version that’s coming to the floor has some more added to it – legal protections for servicers that renegotiate mortgages, changes to the Hope for Homeowners program, and more (details here).

The House Committee on Rules just wrapped up a long meeting to whittle the 41 amendments that were submitted to the bill down to four for consideration during tomorrow’s floor debate. Here are the ones they agreed to bring to a vote by the full House:

  • Conyers, John: (REVISED) The amendment would

    (1) require courts to use FHA appraisal guidelines where the fair market value of a home is in dispute;

    (2) deny relief to individuals who can afford to repay their mortgages without judicial mortgage modification; and

    (3) extend the negotiation period from 15 to 30 days, requiring the debtor to certify that he or she contacted the lender, provided the lender with income, expense and debt statements, and that there was a process for the borrower and lender to seek to reach agreement on a qualified loan modification.

    It also would require a GAO study regarding the effectiveness of mortgage modifications outside of bankruptcy and judicial modifications, whether there should be a sunset, the impact of the amendment on bankruptcy courts, whether relief should be limited to certain types of homeowners. The GAO must analyze how bankruptcy judges restructure mortgages, including the number of judges disciplined as a result of actions taken to restore mortgages.

    The Amendment would clarify that loan modifications, workout plans or other loss mitigation plans are eligible for the servicer safe harbor.

    Requires HUD to receive public input before implementing certain FHA approval provisions.

    With respect to the HOPE for Homeowners Program: recasts the prohibition against having committed fraud over the last 10 years from a freestanding prohibition to a borrower certification. Would amend the National Housing Act to broaden eligibility for Home Equity Conversion Mortgage (HECM) or “reverse mortgage.”

    Would provide that the GAO must submit to Congress a review of the effects of the judicial modification program.

    Would require the Comptroller of Currency, in coordination with the Director of Thrift Supervision, to submit reports to Congress on the volume of mortgage modifications and issue modification data collection and reporting requirements.

    Would express the Sense of Congress that the Treasury Secretary should use amounts made available under the Act to purchase mortgage revenue bonds for single-family housing.

    Would express the Sense of Congress that financial institutions should not foreclose on any principal homeowner until the loan modification programs included in H.R. 1106 and the President’s foreclosure plan are implemented and deemed operational by the Treasury and HUD Secretaries.

    Would establish a Justice Department Nationwide Mortgage Fraud Task Force to coordinate anti-mortgage fraud efforts.

    Would provide that the Treasury Secretary shall provide that the limit on the maximum original principal obligation of a mortgage that may be modified using EESA funds shall not be less than the dollar limit on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation that is in effect at the time the mortgage is modified. (30 minutes of debate)

  • Price, Tom (GA): Would provide that if a homeowner who has had a mortgage modified in a bankruptcy proceeding sells the home at a profit, the lender can recapture the amount of principal lost in the modification. (10 minutes of debate)

  • Peters, Gary (MI):Would provide that, in the case of a debtor whose home is in foreclosure, the debtor could meet the pre-filing credit counseling requirement by receiving counseling either before filing or up to 30 days after filing. (10 minutes of debate)

  • Titus, Dina (NV):Would require a servicer that receives an incentive payment under the Hope for Homeowners program to notify all mortgagors under mortgages they service who are “at-risk homeowners” (as such term is defined by the Secretary), in a form and manner as shall be prescribed by the Secretary, that they may be eligible for the HOPE for Homeowners Program and how to obtain information regarding the program. (10 minutes of debate)
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