Free Foreclosure Help October Update| Preserving Homes and Communities Act and HAMP
Preserving Homes and Communities Act
We have all become familiar by now with the HAMP program (Home Affordability Mortgage Program) that saw the first modification plans begin as of June this year. Now four Democrat Senators want to give more teeth to the foreclosure issue, giving homeowners who are in serious trouble a new ray of hope with the new add-on of the "Preserving
Homes and Communities Act" (PHCA as it will probably called).
HAMP gets a hand
On Capitol Hill last week there was a great deal of discussion about an assertive new proposal that could put tens of thousands of home owners into loan modifications, even if their lenders and loan servicers wanted no part in the plan. The bill is called the “Preserving Homes and Communities Act”.
Under the new bill, which was sponsored by four Democratic housing advocate senators, states that all lenders and servicers would be “prohibited from foreclosing on home owners unless they had discussed reasonable modification options with the borrowers”. This could be great news for all of you who have had Lenders who have refused to modify your loan! The four Senators who are proposing this are: Rhode Island Senator Jack Reed, Illinois Senator Dick Durbin, Jeff Merkey of Oregon and Sheldon Whitehouse of Rhode Island (this would be an excellent time to write your Senator to support this bill).
In a document that went out in September, Lenders have a new method to determine the Net Present Value (NPV) of your home. If “Preserving Homes and Communities Act” passes, all lenders would be required to perform this new test for every seriously delinquent borrower. Part of the computation would be an analysis to determine which would be better- to foreclose or modify the loan. The Lenders, by law, would have to modify your loan if it turns out that it would be better to do so based on the NPV.
What "Preserving Homes and Communities Act" will mean for homeowners
While this bill will force Lenders to the negotiating table, it further helps borrowers even after a modification is in place. For homeowners who couldn’t make their payments after the modification, “the bill would create a multi-billion dollar national fund for states to make loans or grants to prevent foreclosures”.
The senators said they plan to urge a speedy passage of their proposal as “they're frustrated by the slow pace of loan modifications in the face of record numbers of foreclosures this year”. “Voluntary efforts to keep families in their homes have failed,” said Durbin. “This bill will force lenders to modify qualified mortgages” instead of allowing a foreclosure, which, as we have seen the effects of over the last two years as it has virtually destroyed thousands of households, families, and neighborhoods.
“The mortgage payment assistance program created by the bill would provide money to state housing agencies to set up revolving funds to assist people who've lost income in the recession and now face the imminent loss of their house.” This would also include possible grants to help with outright foreclosure.
The net effect of the “Preserving Homes and Communities Act”, would force Lenders to attempt to work something out with a borrower who is in serious financial trouble. Part of this requirement would be “mandatory mediation” to take place prior to a Lenderforeclosing.
This requirement would greatly benefit anyone who has found themselves dealing with Lenders who won’t return their calls, give them phone numbers that go to fax machines, put borrowers in phone tree loops that go nowhere, and other sadistic avoidance games. Lenders who didn't comply would be hit with significant legal penalties, including large fines.
HAMP and Preserving Homes and Communities Act could be the final solution
The banking and mortgage lending groups will no doubt be on the warpath to squash this as it would remove their power to play the games they have become so notoriously known for.
The Senate, however, will be moving very robustly on this proposal. The expectation is that the Democratic House will tenaciously support this bill. “Preserving Homes and Communities Act” will be an important piece of legislation to watch as it moves through the legal process.
Let’s hope that our leaders, both Democrat and Republican, will recognize the need to finally force Banks and Mortgage institutions to stop their game playing and get this issue resolved…now! Until they do, our economy will stay teetering as more foreclosures and job losses loom on the horizon.
Homes and Communities Act” coupled with the "Home Affordable Mortgage Program" (HAMP) could possibly be the two programs that could finally plug the leak in our national housing crisis.
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