Volume 6 Number 7
July/August 2009
In this Issue
Congress Acts to Boost Confidence, Stability in Housing Market
Home Sharing Makes Housing Affordable
Affordable Housing Revives Historic Neighborhood
Making Fair Housing a Reality
In the next issue of ResearchWorks
Congress Acts to Boost Confidence, Stability in Housing Market
The Helping Families Save Their Homes Act
of 2009 — a broad new law designed to help
prevent mortgage foreclosures and enhance
mortgage credit availability — represents a significant
expansion of HUD's scope and responsibility.
Congress passed the bill over-whelmingly on May
19, 2009 and President Obama signed it into law on
May 20. "Specifically, this law improves the Federal
Housing Administration's (FHA's) HOPE for
Homeowners Program, making it a more flexible and
attractive option for homeowners and lenders alike,"
said HUD Secretary Shaun Donovan.
During the signing ceremony, President Obama commented that:
"The Helping Families Save Their Homes Act
advances the goals of our existing housing plan by
providing assistance to responsible homeowners
and preventing avoidable foreclosures. Last
summer, Congress passed the HOPE for
Homeowners Act to help families who found
themselves 'underwater' as a result of declining
home values — families who owed more on their
mortgages than their homes are worth. But too
many administrative and technical hurdles made
it very difficult to navigate, and most borrowers
didn't even bother to try.
This bill removes those hurdles, getting folks into
sustainable and affordable mortgages and more
importantly, keeping them in their homes. And it
expands the reach of our existing housing plan for
homeowners with FHA or USDA rural housing
loans, providing them with new opportunities to
modify or refinance their mortgages to more
affordable levels."
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The Helping Families Save Their Homes Act of 2009 ensures
access to sustainable, affordable mortgages that will keep families
in their homes.
Credit: U.S. Census Bureau, Public Information Office |
The Act expands the reach of the Making Home
Affordable (MHA) program and, as it moved
through Congress, incorporated the provisions of
the Homeless Emergency Assistance and Rapid
Transition to Housing Act that will be discussed in
the September issue of ResearchWorks.
The new law makes the HOPE for Homeowners
Program more flexible and attractive by reducing costs
and easing eligibility requirements for homeowners
and lenders. It helps consumers avoid foreclosure
and refinance their mortgages; offers incentives to
servicers, encouraging them to modify loans when
people are at risk of foreclosure; boosts antifraud
protections for mortgage consumers; and increases
the flow of credit available to the Federal Deposit
Insurance Corporation (FDIC) and the National
Credit Union Administration (NCUA). In addition,
FHA will facilitate loan modifications and refinances for federally guaranteed rural housing and FHA
loans. The costs of program changes mandated in the
legislation will be offset by reserving $2.316 billion
from the total $700 billion in Troubled Asset Relief
Program funds.
The Helping Families Save Their Homes Act builds
on the MHA program, launched in February 2009
by HUD and the U.S. Treasury. MHA worked with
a broad coalition of lenders and borrowers to provide
modifications to avoid foreclosure. MHA also
launched a consumer website, www.MakingHome
Affordable.gov, to help homeowners determine their
eligibility for federal mortgage help. The website
hosted more than 17 million visitors in its first 2
months online.
The Helping Families Save Their Homes Act provides
incentives for HOPE for Homeowners-enabled
refinances. Servicers will evaluate all applicants
for eligibility and will apply tools such as loan
modifications, principal write-downs, assignment
of mortgages to the HUD Secretary, short sales,
and other foreclosure-avoiding techniques. The Act
expresses Congress' intent that mortgage companies
should not initiate a foreclosure on a first mortgage
of a principal dwelling until they have attempted
mitigation in accordance with the HOPE for
Homeowners Program and Homeowner Affordability
and Stability plan.
The new legislation allows the HUD Secretary to
establish a payment to lenders and shields them
from liability if they remain in compliance with their
fiduciary duties under the Truth in Lending Act.
Households with up to $1 million in net worth are
eligible to participate. The Act increases the flexibility
of rules that limit the program to a primary residence,
making allowances for people who have inherited
homes. It honors the leases of renters (as well as
the rights of Section 8 tenants) who are living in
properties that fall into foreclosure.
In other important provisions, the Helping Families
Save Their Homes Act will help ease tight credit in
banks and credit unions by increasing the borrowing
authority of FDIC and NCUA. It makes permanent
the temporary increase to $250,000 in deposits
insured by the FDIC and the NCUA. The law also
carries out Congress' intent that the Secretary of Treasury should purchase mortgage revenue bonds for
single-family housing issued through state and local
governments and their agencies.
The Act includes a number of consumer protection
and fraud prevention provisions that:
- Establish the right of homeowners to know which
company owns their mortgage and when/if the
mortgage changes hands;
- Mandate that home equity conversion mortgages
for the elderly guarantee an insurance period that
is longer than the actuarial life expectancy of those
who hold the mortgages;
- Incorporate antifraud tools to prevent lenders from
using false or misleading marketing tactics; and
- Bar from the program companies whose personnel
have engaged in fraudulent activities or are currently
under HUD audit.
In addition, homeowners using the program must
certify to HUD that they have not intentionally
defaulted on a mortgage in the previous 5 years,
provided false information, or been convicted of fraud
during the past 10 years.
The new law establishes a Nationwide Mortgage
Fraud Task Force in the Department of Justice that
will ensure coordination of state and local entities,
train officials in the detection and prosecution of
mortgage fraud, and recommend legislation. The
task force may also initiate and coordinate federal
mortgage fraud investigations, establish a hotline for
the public, and create a database of suspensions and
revocations of mortgage company licenses.
You can view the full text of the Helping Families
Save Their Homes Act of 2009 at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:s896enr.txt.pdf. Also, see the
White House fact sheet, Reforms for American
Homeowners and Consumers, at www.whitehouse.gov/the_press_office/Reforms-for-American-Homeowners-and-Consumers-President-Obama-Signs-the-Helping-Families-Save-their-Homes-Actand-the-Fraud-Enforcement-and-Recovery-Act/.
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