Senate Agrees to Move Forward with Foreclosure Prevention Act
A much discussed Congressional Bill--The Foreclosure Prevention Act of 2008--is making headway in the Senate, according to Senate majority Leader Harry Reid (D-NV).
“Senior Senate Democrats and Republicans have reached an agreement in principle to strengthen the economy by addressing the nationwide foreclosure crisis. Getting to this point has required compromise by all sides. This is a solid, bipartisan start to keeping families facing foreclosure in their homes, helping other families avoid foreclosures in the future, and helping communities already harmed by foreclosure to recover," Reid said.
Prior to yesterday, Senate Republicans were wary of the bill, saying a motion to allow judges to reduce the principal on mortgage loans would end up costing new homeowners later on.
One opponent of that particular measure--Sen.Mitch McConnell(R-KY)--said the Senate has agreed to a bipartisan approach and will be moving forward to try and help the key housing issues at hand.
“The Majority Leader and I have had good conversations this morning and a few moments ago. We have reached an agreement on how to go forward on the Housing Bill," Sen. McConnell said. “And that agreement is as follows: that Senator Dodd, the Chairman of the Banking Committee, and Senator Shelby, the ranking member, would come together after we invoke cloture on the motion to proceed and come up with a bipartisan substitute to be offered as an amendment to the bill upon which we're about to invoke cloture to proceed. And that would be the underlying bill that would enjoy the confidence and support of the two leaders of the Banking Committee."
Here are the measures included in the current bill:
A proposal to modernize the FHA--allowing the loan limit to be increased to 110-percent from 95-percent of area median home price with a cap of 132-percent of the GSE limit ($550,000). According to the plan, downpayments of 3.5-percent are a provision on any FHA loan and counseling is offered to ensure the loan's viability over its life span.
Providing $4 billion in funding to communities devastated by foreclosure to stabilize the neighborhoods.
Offering pre-foreclosure counseling for families. The proposal will aid an additional 250,000 families
Developing better practices when it comes to mortgage loan disclosure. The guidelines would require that lenders let borrowers know how high the loan payments will go during the duration of the loan's life cycle. The information will be provided within the seven days before closing, so borrowers have time to re-enter the market for better loan terms if need be.
There is also a provision that makes lenders wait a longer period of time--three months to nine months--before foreclosing on a returning soldier's home. It also requires the Department of Defense to create more homeownership counseling programs for soldiers, as well as guarantees an increase the VA loan guarantee amount.
A property tax reduction for American homeowners -- $500 for single filers and $1,000 for joint filers – for the 28.3 million non-itemizers who pay property taxes.
The utilization of mortgage revenue bonds to help with the refinancing of subprime mortgages or with aid to help first-time homebuyers
The bill does not include the much-discussed provision that would allow bankruptcy judges to modify loan terms from the bench
