U.S. Representative Rick Larsen (WA-02) joined a majority of his colleagues in the House (234 -191) to pass legislation that puts President Obama’s housing plan into action to help as many as 9 million American families avoid foreclosure and stay in their homes. President Obama announced details of his plan to tackle the foreclosure crisis on Wednesday, including a website with information for struggling homeowners, www.financialstability.gov/makinghomeaffordable.
“This legislation builds the foundation for President Obama’s plan to help as many as 9 million families avoid foreclosure and stay in their homes,” said Larsen. “The Helping Families Save Their Homes Act delivers fairness, hope, and a practical path to affording their mortgage for families facing foreclosure.”
A record 5.4 million homeowners – nearly 12 percent of Americans with mortgages – were behind on their payments or in foreclosure at the end of last year. Washington state alone has seen an estimated 5,900 foreclosures so far this year. And new information out today reveals that 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are in foreclosure or behind on their payments.
In the 2nd Congressional District, Snohomish County has been hardest hit by the foreclosure crisis, with 458 properties – 1 in every 602 homes – in foreclosure in January alone, according to RealtyTrac.com. In Skagit County, 1 in every 1097 homes was in foreclosure last month, along with 1 in every 4556 homes in Whatcom County and 1 in 5254 homes in Island County. Statistics were unavailable for San Juan County.
The Helping Families Save Their Homes Act (H.R. 1106) gives judges the ability to modify existing mortgages for families with one home who file for Chapter 13 bankruptcy, restoring fairness (since current law already allows this option for individuals with multiple homes) and creating an incentive to spur mortgage servicers into voluntarily modifying loans. The legislation includes strict safeguards to ensure that bankruptcy judges can only modify mortgages if families have exhausted all other options.
“This legislation restores fairness for middle-class families facing foreclosure on their only home by giving them the same rights under bankruptcy law as someone who owns two or more homes,” said Larsen.
In addition to the bankruptcy provisions, today’s legislation helps the Hope for Homeowners program – passed by Congress in July – serve more struggling homeowners by reducing fees and offering new incentives for lenders who modify mortgages. It protects servicers from some lawsuits, giving them confidence to modify loans for homeowners having difficulty making their payments.
“The housing crisis is at the center of this recession and it affects every one of us,” Larsen continued. “This legislation puts President Obama’s housing plan into action so we can stabilize the housing market and begin to get our economy back on track.”
