Senate Approves Measure to Reduce Home Foreclosures

May 7, 2009 - Today the New York Times reported that once again the Bankruptcy Reform Bill was tossed away - but the Senate did vote to approve the foreclosure situation somewhat with new legislation. Did anyone make note of the results of the last legislative efforts from last summer and called, "Hope for Homeowners"?

It's somewhat buried within the following article, but I quote here: "Only one mortgage was modified (emphasis added) under the program, which lawmakers had hoped would help as many as 400,000 homeowners." HELLO! Please read more below. Thank you New York Times for the report. Found at http://www.nytimes.com/2009/05/07/us/politics/07housing

Senate Approves Measure to Reduce Home Foreclosures
By DAVID M. HERSZENHORN

WASHINGTON — The Senate on Wednesday approved a bill that would expand federal efforts to prevent mortgage foreclosures, shield mortgage service companies from lawsuits if they participate in federal loan modification programs, and give renters of foreclosed properties at least 90 days’ notice before eviction.

The bill included an expansion of federal efforts to combat homelessness, which has risen during the economic downturn.

The Senate bill, however, did not include Democrats’ most ambitious proposal to aid troubled homeowners: a provision that would have allowed bankruptcy judges to modify the terms of primary mortgages. That provision, championed by Senator Richard J. Durbin, Democrat of Illinois, failed last week to get the 60 votes needed to advance.

The broader housing measure, which the Senate approved on Wednesday, 91 to 5, must now be reconciled with similar legislation approved by the House in March. The House version included the bankruptcy provision but the speaker, Nancy Pelosi, said it would be removed.

So far, the federal programs to reduce foreclosures have largely fallen flat, particularly the Hope for Homeowners program approved by Congress last summer. Only one mortgage was modified under the program, which lawmakers had hoped would help as many as 400,000 homeowners.

The new Senate bill does not include additional money to aid mortgage borrowers, but it does draw $2.3 billion from the Treasury’s $700 billion financial bailout fund for various provisions.

The bill also would increase the borrowing authority for the Federal Deposit Insurance Corporation to $100 billion from $30 billion, a move that will save banks billions of dollars by reducing the extra premiums that they would have had to pay to shore up the deposit insurance fund.

The bill also extends through 2013 the $250,000 maximum value of deposits insured by the F.D.I.C. Before the financial crisis, the maximum amount insured had been $100,000.

“This bill is principally designed to provide that long sought-for relief for people who are facing foreclosure,” Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, said at a news conference after the vote. “The bill does other things, but certainly, a major target is to deal with peoples’ housing issues and try to stem the tide.”

Senator Jack Reed, Democrat of Rhode Island, a main proponent of the bill, had a strong role in the homeless prevention provisions and others that would give the Treasury secretary more latitude in deciding when to use taxpayer money to buy stock in financial institutions receiving bailout assistance.

Mr. Reed, at the news conference with Mr. Dodd, stressed the effort to fight homelessness. “We’re facing the greatest crisis in homelessness since the Great Depression,” he said, citing news accounts of tent cities appearing.
The Senate bill would provide $2.2 billion for homelessness assistance and up to $440million for prevention.