The government is doing all they can to stop the slowing of the economy. On February 13th 2008 the Foreclosure Act of 2008 was introduced to congress. Heading up the bill is Senator Harry Reid, a democrat in Nevada. You should not be surprised that Nevada holds the record for the highest foreclosure rate since the real estate market peak in summer of 2005. Along with the senator from Nevada there are 25 cosponsors of the bill all of which are democrats or independents.
Highlights of the Proposed Bill:
The law will increasing preforeclosure counseling funding by and additional 200 million dollars. It is estimated this additional funding would help more than 500,000 additional families connect with their lenders and work out a solution to stop the foreclosure process.
If passed the bill would allow housing finance companies to use proceeds from mortgage revenue bonds to refinance short term and adjustable rate mortgages. This will provide an additional 10 billion dollars of tax exempt money for refinancing first time home buyers houses and multiple tenant rental properties.
The bill could help over 600,000 people stop the foreclosure process by allowing them to file for bankruptcy, then the bankruptcy judge has the option to modify the home owners loan. Only nontraditional and sub prime mortgages would be considered for this loan modification process. Home owners would also need to prove they can not repay the mortgage and it would only primary residential homes would be considered.
Other items on the proposed bill include 4 billion in funding for communities with high rates of foreclosure. The communities or cities would buy vacant houses that are in foreclosure, fix them up and rent them or sell them. The law also proposes making mortgage documents more clear at the closing table.
The likelihood of this bill helping people falling into foreclosure in 2008 is not likely. The process for a bill to be passed into law is time consuming and filled with political setbacks. This does not mean the foreclosure prevention act of 2008 will not help stop foreclosure for many home owners, it just means the people in foreclosure right now or in the near future are not likely to see relief from this bill.
The proposed foreclosure prevention bill still has a long way to go until it becomes law. It was introduced in February, next it will be voted on by the Senate, then voted on by the House, then considered by Mr. president himself. Only after the president accepts the bill does it become law. This is another interested thing about this bill. It is being proposed and supported by democrats, so the question is will our current Republican president accept a bill proposed by all democrats?