H.R. 5830 would create a voluntary FHA program that provides mortgage refinancing assistance to allow families to stay in their homes, protect neighborhoods, and help stabilize the housing market.
Detailed Summary
FHA Housing Stabilization and Homeownership Retention Act of 2008 - <b>Title I: Homeownership Retention</b> - (Sec. 102) Amends the National Housing Act (NHA) to create the Refinance Program Oversight Board, which shall establish and oversee a program for insuring homeownership retention mortgages.
Instructs the Secretary of Housing and Urban Development (HUD) to insure any homeownership retention mortgage covering a one- to four-family residence made to pay or prepay outstanding obligations under an existing mortgage on the residence.
Sets forth mortgagor eligibility criteria, including mortgagor certification that: (1) the residence is the only residence in which the mortgagor has any present ownership interest; (2) the mortgagor has not intentionally defaulted on the existing mortgage, nor knowingly, willfully, and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage.
Requires waiver or forgiveness of all: (1) prepayment penalties; and (2) fees and penalties related to default or delinquency on existing mortgages.
Sets forth terms for required: (1) reduction of indebtedness under an existing senior mortgage; (2) extinguishment of debt by refinancing; and (3) treatment of multiple mortgage liens.
Requires debt service payments due under a mortgage insured under this Act to be substantially reduced from the debt service payments due under the existing mortgage or mortgages.
Requires the mortgage to provide that the HUD Secretary retain a lien on the residence which shall: (1) be subordinate to the mortgage insured under this Act, but senior to all other existing mortgages on it; and (2) secure the repayment.
Instructs the Oversight Board to prohibit borrowers from granting a new second lien on the mortgaged property during the first five years the mortgage is insured under this Act.
Requires the mortgagee to document and verify mortgagor income.
Requires a mortgage insured under this Act to: (1) bear interest at a single fixed rate for the entire mortgage term; and (2) involve a principal obligation that does not exceed the limitation that would be allowable for a mortgage insured pursuant to the Economic Stimulus Act of 2008.
Requires the Oversight Board to establish specified underwriting standards for mortgages insured under this Act, including a limitation on origination fees.
Sets forth criteria for appraisal independence. Subjects violations of such criteria to civil monetary penalties.
Prohibits the aggregate original principal obligation of all mortgages insured under this Act from exceeding $300 billion.
Directs: (1) the Oversight Board and the HUD Secretary to monitor independent quality reviews of designated underwriters; and (2) the Inspector General of HUD to conduct an annual compliance audit of the mortgage insurance program under this Act.
Requires the HUD Secretary to ensure that securities based on and backed by a pool or trust composed of mortgages insured under this Act are available to be guaranteed by the Government National Mortgage Association (GNMA) for timely payment of principal and interest.
Makes the insurance of each mortgage under this Act the obligation of the Special Risk Insurance Fund established by this Act.
Sets forth a sunset date of two years after enactment of this Act for commitments to insure under it.
Authorizes appropriations for FY2008-FY2009, including specified funds earmarked for: (1) counseling for veterans recently returning from active duty in the Armed Forces; and (2) the Neighborhood Reinvestment Corporation (NRC).
Repeals the limitation on the aggregate number of home equity conversion mortgages for elderly homeowners insured under this Act.
(Sec. 103) Directs the Board of Governors of the Federal Reserve System to study and report to specified congressional committees on the need for an auction or bulk refinancing mechanism to facilitate refinancing of existing residential mortgages that are at risk for foreclosure into mortgages insured under the NHA.
(Sec. 104) Establishes a temporary increase in the maximum loan guaranty amount for certain housing loans guaranteed by the Secretary of Veterans Affairs.
(Sec. 105) Requires the Securities and Exchange Commission (SEC) to study and report to Congress on: (1) mark-to-market accounting standards applicable to depository institutions with respect to residential mortgages at risk of foreclosure; (2) the effects of such accounting standards upon such institutions' capacity to provide refinancing to residential mortgagors at risk of foreclosure, including residential mortgagors during periods of market value declines and increased foreclosures; and (3) the feasibility of modifications of such standards, requirements, and regulatory actions during periods of market fluctuation in order to maintain the institution's ability to continue to carry mortgages on residential property at risk of foreclosure and assure the availability of credit to refinance such mortgages.
(Sec. 106) Instructs the Comptroller General of the United States to study and report to Congress on the effects of tightening credit markets upon prospective first-time homebuyers in selected communities that have been most detrimentally affected by subprime mortgage foreclosure crises and predatory mortgage lending.
<b>Title II: Office of Housing Counseling</b> - Expand and Preserve Home Ownership Through Counseling Act - (Sec. 202) Amends the Department of Housing and Urban Development Act to establish the Office of Housing Counseling.
(Sec. 203) Amends the Housing and Urban Development Act of 1968 to: (1) prescribe homeownership and rental counseling procedures and requirements; (2) direct the Secretary to make grants to qualified organizations for homeownership or rental counseling assistance; and (3) require such organizations to use only HUD-certified counselors.
(Sec. 206) Directs the HUD Secretary to study and report to Congress on the root causes of home loan defaults and foreclosures, including the role of escrow accounts in helping prime and nonprime borrowers avoid defaults and foreclosures.
(Sec. 208) Amends the Real Estate Settlement Procedures Act of 1974 to require a revamping of a public information booklet regarding federally related mortgage loans, with specified contents.
<b>Title III: Combating Mortgage Fraud</b> - (Sec. 301) Authorizes appropriations for FY2008-FY2012 for federal prosecution of mortgage fraud.
Status of the Legislation
Latest Major Action: 5/5/2008: Placed on the Union Calendar, Calendar No. 386.
Points in Favor
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Points Against
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Visitor Comments
jerry
I think its a great idea. I mean the government has already passed a law to help the greedy homebuilders who drove the prices up anyway. Why not help the common people. Do you think that the homebuilders ever struggled to pay heating costs on their home or worry about groceries? I think not, they were driving around in their company hummers and living it up. Now where do they stand when the common man can't afford the houses that they built.
Tee
I think this is great! I am one who will hopefully benefit from this bill. I am a struggling home owner whose husband has lost his job. I am upside down on my mortgage so I can't refinance, so this bill will help me tremendously! Finally the government is thinking about their citizens!
birdseye
The gov takes 100% of your profit if you refinance in year 1 and still 40% in year 4!!! They also take a 1.5% extra fee per annum. That will mean the banks will now charge 1.5% more as well w/o the government! Permanent enslavement, that is what this is!
contrarian
Yeah, let's bail out all the people who bought more house than they could afford, using a mortgage they wouldn't be able to make the payments on after the teaser rate reset, because they thought real estate values would go up forever. Meanwhile, responsible people continued to rent and save, or stayed in homes they could afford instead of confusing the American dream of homeownership with the "right" to a McMansion, and we'll pay the tab for the irresponsible ones. No thanks.
Smith
I am all for helping people, but voluntarily. This democracy crap has really got to stop. The money I make is my money (no matter how worthless it is) and this "voting on how to spend everyone's money" stuff is getting out of control. We are not a democracy where everything can be voted upon, we are not a communist state where the government takes from each according to his ability and gives to each according to his need, we are a Republic, where the rights of the soverign individual are supreme. (I vote no on this bill, just to be clear.)
Kurtcu
Hi,
My family and I will also benefit from this bill. I had a full-time and part-time job at a university. The part-time job was discontinued due to declining enrollment.
I'm currently looking for another part time position however, due to the state of our economy, that is going to be very difficult to do.
Phil
There is a company already doing this here: www.shortrefime.com
cm
I need help because 'my husband lost his job'? Tell him to get another job. LIFE FACT - NOBODY OWES YOU A LIVING. Every one of you, every single one who would 'benefit' by this bill OVERSPENT, you lived beyond your means, bought houses you would not bother to afford, made more kids than you bother to afford and now want the rest of us to 'refinance' you?
What kind of arrogant, whiney, spineless 'citizens' are you?
Everybody has to save, everybody has to deal with their own bad decisions and selfish choices. I and others will be working hard to call you out on your sickening 'entitlement' attitude and make sure NO MORE handouts are given.
RP
Amen to cm!!!!
putney_swope
you aware that la raza's getting millions annually from this as well ?
why ARE WE.....now subsidizing la raza ?
+++++
and to anyone in agreement with the government NOW having taxpayers foot THIS BILL....what about apaprtment dwellers ?
people that are responsible and pay their OWN BILLS ?
what's next ? paying for their LEXUS,caddies,etc. so the repo man won't come ?
why not ?
THIS is NOT OUR RESPONSIBILITY.
Angry Renter.com
The number of defaulting loans in this program is unknowable, but could easily cost taxpayers $100 billion or more given that the bill bails out the least credit-worthy and that prices are still declining.
whatever
My wife became ill in 2006, medical bills continue to pile-up. Money we had set aside for emergency is gone. Mortgage companies did not work with us early on as we were not "delinquent enough"-no kidding. Other bills we paid through a shuffle-game. I have a decent enough salary so as not to qualify for much of the assistance out there now. Would sell the house (sold newer car already)-nothing is selling here. I need to do some home repair; but no cash. Credit score has now dipped. The newer plans that have come out to assist, we cannot qualify for. My job moved, commute increased and now must pay parking-losing another $400+ a month. Not looking to walk-away from obligation, looking for a restructure to allow us to pay everything, make repairs and sell as soon as possible-we'd give up any profit. Caring for my wife part of the time and the insurance does not allow me to change jobs or have time for a part-time.
Jim C
This will aid in preventing a lot of loan failures with the 85% of appraisal being used as a condition where the original lender will get a short sale and the homeowner will get an affordable loan.
There are many predatory loans out there like a 2/28, 3/27 set to interest only and go up substantially to unaffordable rates. Hopefully this program will alleviate this problem caused by an unregulated lending industry which was very knowingly selling these destined to fail loans.
Jackie
So let me get this straight: People who made stupid decisions and bought homes that they could never afford in the first place are going to be bailed out not only with lower interest rates, but a new lower principal too? And not only does their principal get lowered to appraisal, it gets lowered to only 85% of appraisal, meaning they now pay less than market value!!!
Not only that, but now the government will be saddled with an onslaught of high-risk loans that even the FHA director has recently stated could lead the agency into insolvency, thus making it impossible for the FHA to fulfill its original mission of helping first time home-buyers and lower income workers buy a home that they could AFFORD.
How exactly is that fair to those of us who made the smart choice and waited to buy a home until we could actually afford one (and are still waiting)? Why should my hard earned tax money go to bailout those who were too stupid or greedy to know their own financial limits?
Kevin
I struggle every month to pay my bills, including my rent, but I don't see the government creating new bills to reduce my debt by tens of thousands of dollars.
As an adult I make financial decisions and I have to live with the consequences of those decisions. Why should this simple fact of life be different for those who bought homes they could not afford?
Tina
Take blame out of the equation. People who were employed at all economic levels have lost their jobs & have used all savings to pay bills & have little to nothing left. They can't hire someone to clean their carpet, do their landscaping, are not taking their clothes to the dry cleaners, are not active consumers, are paying more for groceries & gas. Guess what? The guy who cleaned their carpet, the landscaper, the dry cleaner. They are all suffering loss of income up to 75% & losing their homes too. This is not about greed, it is not about liars. Look at the big picture. If the govt didn’t loan the money they are not entitled to the spoils of war. When the govt offers social services or aid for foreign and domestic causes, they don't go into a big vault and grab bags full of money. Those funds are borrowed from BANKS. The bill must allow for banks to recovery losses, not the govt. THAT is fair and equitable. Stop wondering who is to blame. It doesn’t matter anymore.
Sandra
If the government doesn't help these homeowners we will be facing a bigger problem in the future. I know I don't want to see a bunch of foreclosed homes in my neighborhood. This will cause the market to dip even more then it already has. We spend money bailing other countries why not our own. Not everyone that is in trouble was greedy either a lot has to do with the market. I know people that put 20% down and their house is worth even less then their existing loan.
Jim C
I agree with some postings and hope that this legislation makes it through to alleviate the problem created by the loan originators of predatory nature. As pointed out, people having sick spouses or losing second jobs could also be helped by these plans.
The plan is voluntary on borrower and lender so it may do little good. Passing HR 3609 would help a lot of people posting onto this list.