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April 21, 2008 - House Financial Services Chairman Barney Frank (D, Mass.) announced that mark-ups will be held April 23 and 24 on two measures to combat the unprecedented rise in foreclosures.
The legislation first introduced in March by Chairman Frank has been split into two measures: one, H.R. 5830, the Federal Housing Administration (FHA) Housing and Homeowner Retention Act; and two, H.R. 5818, the Neighborhood Stabilization Act of 2008.
H.R. 5830, the FHA Housing and Homeowner Retention Act, would expand FHA’s program to help refinance at-risk borrowers into viable mortgages. The voluntary program would permit the FHA to provide up to $300 billion in new guarantees for mortgage relief. The loans would be for owner-occupied residences or existing senior loans refinanced or originated before December 31, 2007. The measure would “provide refinancing assistance to allow families to stay in their homes, protect neighborhoods and help stabilize the housing market,” stated the House Financial Services Committee on April 18.
Further, the bill would implement improved fraud prevention and oversight and increase FHA’s capacity to conduct the program. The program will run for two years and is eligible for extensions up to two more years. The bill also requires the Federal Reserve Board to conduct a study on the need for an auction or bulk refinancing mechanism.
H.R. 5818, the Neighborhood Stabilization Act of 2008, would establish a $15 billion U.S. Department of Housing and Development (HUD)-administered loan and grant program for the purchase and rehabilitation of owner-vacated, foreclosed homes. The fund would be split into loans and grants to be dispersed among the states based on the state’s percentage of nationwide foreclosures over the last four quarters.
Loans made through H.R. 5818 would be non-recourse, zero-interest loans to finance acquisition and rehabilitation. Families buying resold homes cannot have incomes to exceed 140 percent of the area median income (AMI) to be eligible for the loan. States will be required to give preference to the lowest income families for the longest period and homeowners whose mortgages have been foreclosed. States will also have the discretion to grant loans to otherwise income-eligible veterans, teachers, workforce and homeless persons.
To read more about these measures, visit the House Financial Services Committee website here.
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