The Latest On Possible Relief

As I mentioned five days ago, Congress is getting closer to passage of a new foreclosure relief bill. Today the Senate passed it by a huge margin. Now its differences must be reconciled with the House bill, after which it goes to the desk of the President. Bush has said he will veto it, claiming it's a bailout of the banks and also rewards what he terms irresponsible borrowing by the homeowners who, in his opinion, should have known better than to assume this much debt under the conditions of the loans made. Talk about blaming both ends of the same issue. This bill, once both versions match, is by far the best idea to come out of Congress in years, in the humble opinion of this observer. It directly deals with the major portion of the largest financial crisis since at least the Savings and Loan debacle of the 80's and perhaps the Depression. If you are in need of support on your home loans, call or write your representatives in the House and Senate and get this bill to the President's desk, and do it with such a large margin that even if it is vetoed, the veto can be overridden. That is a MUST!

Arrests and Veto Overrides

Two important things happened today, and at least one of them could provide vital assistance to homeowners fearing loss of their homes to foreclosure. The one that Could help homeowners is the one we've discussed here on a number of previous occasions--the Frank bill from the House of Representatives and its Senate mirror image. All along the Bush White House has threatened to veto the bill, saying it would be too costly and also could 'unfairly' cut into lender profits (as if all of the foreclosures weren't doing EXACTLY that already).

The Senate today beat back Republican attempts to gut the bill and passed it by veto-proof margins. Subject to a committee review of its effects vis-a-vis Countrywide, it may soon actually get to Bush's desk for his signature, and, if vetoed, back to both houses of Congress for the override vote.

The other item of interest, although too soon to see if it will be a basis for further assistance to homeowners and those who've already lost their homes, is a large mortgage fraud sting by the FBI. Citing various alleged violations of mortgage fraud laws, the Bureau obtained indictments or arrested hundreds of lenders from at least 19 separate lending institutions today. The makeup of the accused ranged from executives at the leading investment banking firm, Bear Sterns to employees of a number of other mortgage lenders and brokers. Is this too little-too late? Only time will tell. Stay tuned.

New Program to Help Homeowners

The major bank lenders who are already participating in the Hope Now program will announce a new plan tomorrow designed to further aid desperate homeowners facing foreclosure. Although Hope Now has been somewhat of questionable benefit to date due to its tight limits on eligibility, under this new plan, borrowers will apparently get better contact and information as they try to stave off foreclosure.

Homeowners will receive an acknowledgment within five days of making contact with their lender. Additionally, lenders will pledge to remain in close contact with the borrowers while the review of their mortgages is underway.


Unfortunately, this agreement is not planned to be legally binding.

New Help At the State Level

Just as there are various plans approved or in process at the Federal level, there are a number of foreclosure-related bills currently under discussion in the California state legislature. The main ones of interest are:
1.) SB1137: passed by the state Senate earlier in the year, this would require lenders to contact homeowners earlier than at present in the foreclosure process,give 60 days notice to renting tenantgs in homes likely to be foreclosed upon and require foreclosing lenders maintain the physical condition of homes to avoid blight. In addition to the Senate, it has already passed the Assembly Banking Committee and is scheduled to be heard by the Assembly Appropriations Committee.
2.) AB1830: Passed by the Assembly on May 29, this bill would tighten underwriting standards for future sub-prime loans; ban pre-payment penalties and eliminatge 'steering' of borrowers to higher interest rate loans by loan brokers.
3.) AB2740: Sets new rules on how loan servicers deal with homeowners. It is modeled on a similar bill that became law last year in North Carolina.

There are others as well, but these appear at this time to be the most relevant.