House Passes Legislation to Help Hard-Pressed Families Stay in Their Homes
House Passes Legislation to Help Hard-Pressed Families Stay in Their Homes
The U.S. House of Representatives today approved The Helping Families Save Their Homes Act, legislation which can keep hundreds of thousands of families from losing their homes at no cost to the government or taxpayers. The measure would allow judges to reduce mortgage interest rates for homeowners in bankruptcy and allow them to continue making payments and stay in their homes rather than losing them to foreclosure.
"There are nearly five-million American families on the verge of losing homes because their property values have fallen so much that refinancing isn't a possibility, or they've lost jobs and are struggling to make house payments," said Rep. Neil Abercrombie. "It's a lot better to keep someone in their home, even if the lender earns less interest on the loan, than to have the house go into foreclosure, put the family on the street, leave the bank holding yet another foreclosed property, and contribute to the decline of an entire neighborhood."
Hawaii had 337 home foreclosure filings in January alone, more than twice January 2008. Home prices dropped 18 percent in the last quarter of 2008. Nationally, more than 14 million homeowners owe more on their mortgage than their home is worth, and they cannot refinance. In Hawaii, 6.2% of the state's homeowners owe more than their houses are worth.
Last year, Congress passed the Hope for Homeowners Act, which offered incentives for lenders to sit down voluntarily with cash-strapped homeowners and negotiate lower interest rates, but few lenders have been willing. Since last July, only 350 mortgages have been renegotiated across the country.
Today's legislation also allows a bankruptcy judge to actually lower the balance of the loan as a last resort to stave off foreclosure. In that event, the lender would be entitled to recover most of that amount from any profit should the property be sold.
"This measure is a critical step in establishing the legislative authority for President Obama's comprehensive Homeowner Affordability and Stability Plan, which he outlined last week," Abercrombie said. "Our country's economic meltdown began with declining home values, and addressing this is critical to economic recovery."
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