Lawmakers Desperate To Contain Foreclosures

November 5th, 2007

Ranking Bush administrative personnel together with executives from mortgage firm Countrywide Financial Corporation was to have testified on Friday 2^nd September. The law is trying to envisage ways out of this foreclosure crisis to give relief to all concerned.

At 10 am the House Financial Services Committee was scheduled to hear Robert Steel the Undersecretary of Domestic Finance, Treasury Department, Brian Montgomery the Assistant Secretary of Housing and Urban Development who also is the head of the Federal Housing Administration and Sandor Samuels, Executive Managing Director of the aforesaid largest mortgage lender in USA. Other speakers were to have been Tom Miller, Attorney General of Iowa, Ken Wade, Chief Executive of a community organization – NeighborWorks America, Bruce Marks, Chief Executive of another community welfare group – Neighborhood Assistance Corporation of America, Bill Longbrake, senior policy advisor of an industry group dealing with housing – Financial Services Roundtable.

The hearing is a follow up on the pressure being put on the mortgage sector by the government echoing the sentiments of the people, to be more proactive in their efforts to stop eviction of borrowers from their houses.

Last month the Bush administration set up Hope Now – a coalition of industry groups, to help those whose mortgage rates are about to reset at a higher rate. The group comprises of Bank of America Corporation, Citigroup Inc as well as J.P. Morgan Chase & Co. The first move will be to send letters this month to more than 200,000 borrowers who will in all probability go under default because of this rise.

On 18^th September a House of Representatives passed a bill that would permit FHA, that is a government agency, to back refinanced loans for delinquent borrowers belonging to the middle and low-income bracket. This will be the first mortgage-related legislation to make a debut. The legislation initiated by Barney Frank (D- Mass) aimed at increasing the limit of FHA-insured mortgages to $500,000 from its present cap of $362,000. The bill was stalled in the Senate.

The chapter does not close here – in the coming two years another 2 million families might lose their houses. In October alone a staggering loan worth about $50 billion mortgages falls under the reset cloud. The idea is to make refinancing easier on lenient terms but the doubt remains if the incentive is strong enough for borrowers to take this step.

Via