Foreclosure Prevention Act of 2008

To offer a ray of light amidst all the panic and confusion over foreclosure, the government introduced the Foreclosure Prevention Act of 2008, on February 13th of this year. The bill is headed by a senator Harry Reid, a democrat from Nevada (a place that holds the record for highest Foreclosure rates since 2005). The senator also has the support of 25 other co-sponsors of the bill, all of which are independents or democrats. The bill gets introduced in a very crucial point in time, and if this gets passed, it could prove vital for the stability of the country’s economy.

The bill comes with the following highlights –

• The bill proposes the pre-foreclosure counseling fund to be raised by an additional 20 million dollars. It is calculated that this additional raise will help around 500,000 families to get connected with their lenders and work a way out of the foreclosure process.

• If the bill is passed, it will allow the lender/ housing finance companies to use the proceeds from the mortgage revenue bonds to refinance short term and adjustable rate mortgages. With this, an additional 10 million dollar of tax exempt money will be provided for refinancing multiple tenant rental property and first time home buyers houses.

• The bill could save around 600,000 people from the foreclosure process by allowing them to file for bankruptcy. The bankruptcy judge then has the option for softening or modifying the home owner’s loan. But the loan modification process is only applicable for the non-traditional and sub prime mortgages. Also, the home owners have to prove that they really cannot repay their mortgages, before claiming any benefits of the bill.

• Other highlights of this proposed bill include - 4 billion of funding for the communities that are affected with high rates of foreclosure. It also proposes to make the details of the mortgage documents clearer at the closing table.

The proposed Foreclosure Prevention Act of 2008 still has a long way to go before it becomes a law. The process is lengthy and loaded with political setbacks. However people are optimistic and are hoping that the bill will soon get passed. And bring them the much needed respite, they have been waiting for. 

Digg  Reddit  Delicious  Facebook StumbleUpon