Sununu Issues Statement on Foreclosure Prevention Act

Press Release

SUNUNU ISSUES STATEMENT ON FORECLOSURE PREVENTION ACT

Supports bill to address housing crisis and mortgage regulation

United States Senator John Sununu (R-NH) voted today (7/26) to pass the "Foreclosure Prevention Act"- comprehensive legislation that will help struggling homeowners hard-hit by foreclosures, stabilize the housing market, reform the oversight of government sponsored enterprises Fannie Mae and Freddie Mac, and strengthen mortgage disclosure requirements. In addition, the Act provides an increased standard deduction for those who pay property taxes but do not itemize deductions on their federal returns.

"Despite my concerns about the size of this new Federal Housing Administration housing fund, I voted for this bill because it will encourage the sale of foreclosed properties and provide additional resources to the New Hampshire Housing Finance Authority," said Sununu. "Most significantly, it improves oversight for Fannie Mae and Freddie Mac, the housing mortgage giants that are essential to America's housing finance system. I held my first hearing to examine the risks they pose to our economy nearly ten years ago and introduced legislation to better regulate them five years ago. By improving their capital standards and limiting their massive investment portfolios, I hope that a strong regulator will minimize the financial risk to American taxpayers."

As passed by the Senate, the "Foreclosure Prevention Act"includes the following:

* Government Sponsored Enterprise Reform. Strengthened and modernized regulation of the housing government-sponsored enterprises - Fannie Mae, Freddie Mac, and the Federal Home Loan Banks - which are central to the mortgage market. A new "world-class" regulator is needed to guard against threats to our capital markets and protect against negative consequences for taxpayers that could arise without proper oversight. Sununu was an original cosponsor and has been a long-time champion of similar legislation.
* First-Time Homebuyers Tax Credit. A $7,500 refundable tax credit for first-time homebuyers to help reduce the existing stock of unoccupied housing. Sununu is a cosponsor of similar legislation authored by Sen. Johnny Isakson (R-GA).
* Small PHA Paperwork Reduction Act. Sununu's legislation that reduces unnecessary paperwork requirements for Public Housing Authorities (PHAs); this allows them to focus more time and resources on providing affordable housing, as long as they remain in good standing.
* Hope for Homeowners. Voluntary program that will allow distressed mortgages to be refinanced and insured by the Federal Housing Administration (FHA).
* FHA Modernization. Significant reforms to modernize, streamline, and expand the reach of the FHA program. Downpayments of 3.5% will be required for any FHA loan to help provide for more stable homeownership.
* Mortgage Revenue Bonds. $11 billion of Federal tax-exempt private activity bond authority that may be used to refinance subprime mortgages. The measure also exempts interest earned on the bonds from the alternative minimum tax.
* Housing Finance Market Stabilization. Secretary of Treasury authority to temporarily increase the existing line of credit to Fannie Mae and Freddie Mac and to directly invest in these companies if necessary to stabilize the housing finance markets. Authority could only be used in an emergency, taking into account certain taxpayer protections.
* Nation's Veterans. Extended timeframe from three to nine months after a soldier returns from service before a lender may initiate foreclosure, and one year relief from increase in mortgage interest rates for returning soldiers. In addition, the Defense Department is required to establish a counseling program for veterans and active service members facing financial difficulties. Also included is a provision to increase the VA loan guarantee amount, so that veterans have additional homeownership opportunities. The measure incorporates an amendment to increase the specially-adapted housing benefits for disabled veterans, an initiative that Senator Sununu has strongly backed.
* Enhancing Mortgage Disclosure. Expansion of home loans subject to early disclosures under the Truth In Lending Act (TILA), including refinancings. The bill requires a new disclosure that informs borrowers of the maximum monthly payments possible under their loan, and also increases the range of statutory damages for TILA violations.
* Pre-Foreclosure Counseling. $150 million in additional funding for housing counseling. These funds will be distributed by the Neighborhood Reinvestment Corporation by the end of the year to ensure timely assistance for families in need.

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