For Immediate Release:
December 3, 2008
 Further Information:
Mark Forest/Rory Sheehan - 202-225-3111
DELAHUNT/HODES FILE LEGISLATION TO KEEP FAMILIES IN THEIR HOMES
  Bill Would Give Bankrupcy Judges The Ability To Modify Toxic Mortgages
WASHINGTON, DC – This week, Congressman Bill Delahunt (D-MA) and Congressman Paul Hodes (D-NH) introduced legislation to address the foreclosure crisis and guard against the potential misuse of  taxpayers dollars.

“At the heart of the current economic crisis is the explosion of subprime and predatory lending that has forced millions of homes into foreclosure,” said Delahunt.  “In spite of the massive financial rescue plan, banks are still unwilling to restructure millions of toxic mortgages.  This legislation requires the modification of these questionable mortgages and gives bankruptcy judges the authority, if necessary, to modify mortgages and prevent as many as 600,000 foreclosures.”

“This legislation will address the underlying mortgage crisis that triggered our economic crisis,” Congressman Paul Hodes said. “We are giving more tools for homeowners to renegotiate the terms of their loan and stop the rising number of foreclosures across the country. There is no better economic stimulus than keeping more working families in their own homes."

H.R. 7307, “The Homeowner Assistance and Taxpayer Protection Act,” will specifically:

  • Require the Department of the Treasury, the Federal Reserve, the FDIC and FHFA to restructure all loans where these regulators  now own or have a controlling interest in the loans, rather than simply encouraging them to do so as the Emergency Economic Stabilization Act currently  does;
  • Require servicers to restructure all loans that qualify for the Hope for Homeowners program, rather than simply encouraging them to do so as current law requires
  • Allow bankruptcy judges to modify mortgages on primary residences.
  • Bar banks participating in the Capital Purchase Program, authorized by the Emergency Economic Stabilization Act, from increasing common share dividends as long as the government owns preferred shares; and
  • Require participating banks to reduce the next year's dividends in an amount equal to the compensation paid to the top five executives in excess of $500,000.
A companion bill was also introduced by Senator Richard Durbin on November 17, 2008. The Hodes/Delahunt legislation has been referred to both the House Judiciary and Financial Services Committees.

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