The pressure is on Congress and the banking industry to come up with real solutions, or risk derailing economic recovery. There are around six million foreclosures set to enter the market in the near future, in addition to the million foreclosed properties currently in mortgage modification, and record number of homeowners behind on their payments. Despite this, the Preserving Homes and Committee Act, prescribing mortgage assistance, mediation and federal funding, languishes in Congressional committee, and the recently expanded homebuyer tax credit has been unable to keep home prices from continuing their fall. See the following article from Housing Predictor for more on this.
More than one and a half months after the proposal to force bankers to work with homeowners at risk of foreclosure became public, the Congressional bill is bogged down in committee. A House Financial Services Committee spokesman declined to say whether the bill would be voted on before Congress adjourns for the session.
“That’s a very difficult question to answer,” said committee spokesman Steve Adamske. “I have no idea.” Before becoming law, the bill would have to be voted on by the financial services committee and then go to the House for a vote. If approved by the House of Representatives, the bill known as the Preserving Homes and Committee Act of 2009 authored by Sen. Jack Reed (D-RI), would then go to the Senate for a vote.
Telephone calls and messages left for news spokespersons for Senator Reed were not returned.
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The bill would establish a mortgage payment assistance program to help families at risk of foreclosure. The proposal would also provide incentives to states and local governments to create mediation programs and provide an avenue for homeowners to meet face to face with bank representatives. It would provide $6.3-billion in funding to offer homeowner grants and subsidized loans and $80-million in federal funds to states and local governments.
Congress has attempted to stabilize the housing market through a first time home buyers $8,000 tax incentive, which was extended and expanded through April, 2010. The Fed and Treasury have also worked to stabilize lending markets by buying up securities that back residential mortgages after the financial crisis erupted more than a year ago. However, little of the efforts made have actually worked to stabilize housing markets, most of which are still experiencing record declining home prices.
Banking lobbyists have strongly lobbied against efforts to force lenders to work with homeowners to modify mortgages. Slightly more than 1-million homeowners at risk of foreclosure have been offered trial modifications. More than 6-million homes are forecast to be foreclosed through just 2012.
The Mortgage Bankers Association (MBA) says more than a third of the overall increase of homes starting the foreclosure process are attributable to prime, fixed rate loans. The number of homeowners at least one payment past due is more than one in eight—the highest level since the MBA began keeping track.
“As foreclosure rates continue to climb, a lasting economic recovery becomes harder to reach,” said Senator Dick Durbin (D-IL), a co-sponsor of the bill. “Until we stabilize the housing market, we simply won’t get a handle on the broader economic crisis. Voluntary efforts to keep families in their homes have failed.”
“As I travel around our state, I often hear concerns from Rhode Islanders affected by our nation’s housing crisis,” said Senator Sheldon Whitehouse (D-RI), a co-sponsor of the bill. “It is clear to me that Congress must do more to level the field for struggling American homeowners.”
This article has been republished from Housing Predictor. You can also view this article at Housing Predictor, a real estate analysis and forecasting site.