President Barack Obama signed a housing aid bill in May that will reportedly save 400,000 homeowners from foreclosure and spend $2.2 billion on homeless aid programs.
Named the Helping Families Save Their Homes Act (S. 896), the bill bars many subprime lenders from participating in FHA loan programs, and modifies the Neighborhood Stabilization Program (NSP), allowing states that have received the minimum funding to shift resources to target areas most at risk of foreclosure.
When it takes effect, the bill expands the existing $300 billion program encouraging lenders to adjust mortgages if the homeowner agrees to pay an insurance premium. The homeowner’s high interest rate mortgage will be swapped out for a 30-year fixed loan backed by the Federal Housing Administration (FHA).
Stricken from the legislation was a provision allowing bankruptcy judges to “cram down” changes to a distressed borrower’s mortgage terms as well as broader mortgage lending reform sought by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
Sources: Reuters, American Chronicle, The Washington Post