House Committee Passes Reforms to Foreclosure Assistance Program

The House Financial Services Committee last week approved H.R. 787, a bill which reforms the Hope for Homeowners program. Hope for Homeowners was designed to help families who are facing foreclosure refinance into a safe, affordable FHA mortgage. However, the restrictions on the program have been such that lenders are refusing to participate, and since October of 2008 only 25 mortgages have closed under the program. HR 787 eases some restrictions to make lender participation more likely. The bill allows for payments to loan servicers and lessens the write-down for lenders, while preserving the benefits to homeowners and limiting risks to the FHA fund and the American taxpayer. In addition, the Committee approved another bill, HR 788, to provide a safe harbor for mortgage servicers who engage in certain loan modifications. This bill should also help ease the way for more loan modifications for families in trouble. Both bills are expected on the Floor of the House this week.