U.S. Rep. Kendrick B. Meek Introduces Mortgage Legislation to Help Homeowners

 

WASHINGTON, DC – Congressman Kendrick B. Meek (D-FL) introduced legislation today to help bring last year’s $700 billion bailout to the homeowners who so desperately need it.

The legislation amends the core of the bailout language which currently provides the Treasury with the authority to purchase troubled mortgages from lenders. Money for this program was supposed to help stabilize banks and the lending market and give banks the ability to restructure their customer’s mortgages. The Meek bill would instead allow the Treasury to only purchase those notes in instances where the lender has made every effort to make the borrower’s current mortgage note less than 30% of the borrower’s gross monthly income.

Florida ranks second in the nation in the number of foreclosures, with 64.2 filings per 1,000 households in September. Miami-Dade and Broward Counties are the leading counties in Florida whose foreclosure rates continue to rise. In South Florida, foreclosures nearly doubled over a year ago with 17,174 filings between January and September, up from 9,262 during the previous nine-month period. In Broward County, filings doubled to 6,689, up from 3,370 in 2007. In Miami-Dade County, filings were up 46 percent, to 7,729 from 4,133.

“Our nation is presently in a major housing slump and foreclosure crisis. The $700 billion was specifically meant to help homeowners to stay in their home, but few people have been helped by this. My bill ensures that banks and lenders will have every incentive to maximize efforts to not only keep their customers in homeownership, but to enable them to pay other bills, invest in their families’ futures, and contribute to the economy on a daily basis.”

Specifically, the bill filed today will require that banks use their best efforts to restructure or modify the loans of customers who are in pre-foreclosure or in danger of losing their home to create a payment that is 30% or lower of their monthly income. Only then would these lenders be able to access funds from the government to make up the difference between the original note and the new note. Homes will be saved, and at the same time, banks will break even while costs to the Treasury would be significantly reduced.

Congressman Meek is also looking to reintroduce legislation filed late last year to help consumers with bad credit scores resulting from predatory lenders in the subprime and adjustable rate mortgage industry.  The bill will help these consumers restore their credit rating.

This legislation is limited to consumers who can prove that between January 1, 2004 through March 31, 2009, negative items on their credit score resulting in a debt to income ratio of over 36% was a direct result of a predatory mortgage. Lenders are typically unlikely to give a loan to an individual with a recurring debt ratio of over 36%, unless it is a highly qualified borrower.

“It serves little purpose if we give Wall Street a ‘do-over’ while millions of Americans suffer the long-term effects of credit issues that were not completely of their making. For the foreseeable future, credit scores under 700 will not be helpful in securing loans for mortgages, a college student’s education, or a new car. We have to give Americans the ability to secure credit if we want an economic turnaround.”

The bill seeks to help those who were caught by a poor market, unscrupulous lenders, and bad timing, but who otherwise are creditworthy individuals.

“If we are going to prop up the industry, then those who were victims of this financial meltdown should not be left on the outside looking in because negative actors in the industry helped destroy their credit,” said Congressman Meek.

Congressman Meek will also re-file legislation to consolidate law enforcement efforts to combat mortgage fraud originally passed by the House on Sept. 22, 2008.

 

Mortgage fraud is one of the fastest growing white collar crimes in the United States, with the number of reported mortgage fraud cases more than doubling from 2004 to 2007.  This bill was inspired by Miami-Dade County’s successful Mortgage Fraud Task Force which has made over 71 arrests, reflecting over 30 million dollars in mortgage fraud. 

 

The Act establishes a Nationwide Mortgage Fraud Coordinator to help reduce the mortgage fraud problem and prevent the victimization of individuals and businesses through effective education, legislation, regulation, law enforcement and prosecution.

U.S. Rep. Kendrick B. Meek represents the 17^th Congressional District of Florida which includes parts of Miami-Dade and Broward Counties. He serves as the lone Floridian sitting on the House Committee on Ways and Means, and also sits on the House Armed Services Committee.

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