The House Financial Services Committee has voted to kill two foreclosure relief programs.
The FHA Refinance Program Termination Act (H.R. 830) targets the Federal Housing Administration’s (FHA) Short Refi Program, which allows homeowners who own more on their loan than the property is worth to refinance into a new FHA-insured mortgage as long as their lender agrees to write off at least 10 percent of the unpaid principal balance on the original mortgage.
The Emergency Mortgage Relief Program Termination Act (H.R. 836) would end a program established by the Dodd-Frank Reform Act last summer to provide homeowners who’ve lost their jobs with a “bridge loan” of up to $50,000 to cover past due mortgage expenses, plus up to 24 months of monthly mortgage payments while the borrower searches for new employment.
Both bills are up for debate in the House; but they are worth saving? There is no question that these foreclosure relief programs are terribly flawed and failed to help the vast majority of the homeowners stop foreclosure . However, what will we offer in their place? The foreclosure crisis is still here, it hasn’t gone away. Homeowners are still losing their biggest investments with few options available to save them from foreclosure. We should say that there are few “viable” options available because the past two years have shown us that the foreclosure prevention programs available are not viable for most.
Right now we need foreclosure prevention programs which can expeditiously provide relief to homeowners who are stuck in upside down mortgages, who are unemployed/underemployed and who are facing foreclosure because their monthly mortgage payments have increased beyond their financial means. It is neither wise nor feasible to allow these foreclosures to go unchecked if we really want to have an economic turnaround.
(source: http://www.dsnews.com/articles/house-committee-votes-to-kill-two-housing-programs-delays-decision-on-2011-03-03 )