Red Rock On Air

(From Office of Jim Oberstar)

Washington DC – Legislation that gives many Americans facing foreclosure a fighting chance to hold on to their homes passed the U.S. House of Representatives today.  The Helping Families Save Their Homes Act of 2009 (HR 1106) allows judges in the bankruptcy courts to modify the terms of a mortgage on a primary residence.  “This gives homeowners the same bankruptcy protections that are currently afforded to the owners of lake homes and yachts,” said Congressman Jim Oberstar.

“Job losses and declining wages, predatory lending, and unaffordable sub-prime mortgages have led to a collapse of the housing market,” Oberstar continued.  “Some banks and mortgage brokers were quick to make irresponsible loans when the housing market was growing and their profits were high.  When the bubble burst, they were just as quick to go straight to foreclosure. We need to make sure that people who can afford to continue making payments under the terms of a modified mortgage are given that chance.”

The legislation y requires the banks and homeowners to attempt to renegotiate the terms of troubled mortgages for at least 30 days before filing for bankruptcy.

“This gives some leverage to the homeowner who is in trouble, and the bank will have to at least try to work out a deal which benefits both parties.  If they don’t, the homeowner can file for bankruptcy under Chapter 13.  While Chapter 13 is a costly process for both parties, it will address rising rates of foreclosure by keeping people in their homes,” said Oberstar.

The bill also includes a number of other reforms including:

* Immunity from shareholder’s lawsuits for banks that willingly modify mortgages
* Extends FHA and VA rural housing guarantees to loans have been adjusted by bankruptcy judges
* Reduces fees and provides a $1,000 payment to banks modifying a mortgage through the Hope for Homeowners program
* Makes permanent the $250,000 increase in FDIC coverage of bank deposits.

“This is an important step towards resolving the financial and housing crisis facing America today,” said Oberstar.  “The collapse of the housing market and record number of home foreclosures has led to the financial market collapse and inability to access credit.  By keeping people in their homes, we are helping to stabilize the housing market that is essential to our economic recovery.”