A Democratic House member from Pennsylvania is asking the chairman of the Senate Banking Committee to add the Pennsylvanian’s foreclosure prevention plan to the Senate version of financial oversight reform.
Rep. Chaka Fattah (D-Pa.) asked Sen. Chris Dodd (D-Conn.) to add an emergency mortgage assistance program to the financial reform plan that Dodd unveiled Monday. Fattah’s program passed as part of the House version of financial reform approved in December.
Fattah says his program is based on a successful Pennsylvania program that he helped create as a young state legislator. The plan proposes to use unspent TARP (Troubled Asset Relief Program) funds to provide Relief for distressed homeowners who are unable to meet their mortgage obligations due to financial hardship, as well as providing assistance to renters seeking affordable housing.
Fattah’s mortgage program comes as signs of trouble mount with President Obama’s own foreclosure-prevention initiative. Mortgage servicers reportedly have delivered relatively few permanent modifications, and hundreds of thousands of borrowers in trial modifications have yet to receive a final answer after many months of waiting.
“Congress must implement measures to ensure the conditions that led to the [financial] crisis will not occur again,” Fattah writes in his letter to Dodd. “Regulatory reform, however, must begin with correcting the damaged housing market by providing people the tools necessary to keep their homes and prevent foreclosure.”
The Homeowners’ Emergency Mortgage Assistance Program (HEMAP), the Pennsylvania model upon which the new legislation is based, has distributed more than $236 million in emergency mortgage assistance since 1983, Fattah says in a statement. Most of that money has since been repaid. That success is a microcosm of what can happen on the national level, Fattah adds.
Fattah notes that foreclosures caused by unemployment are increasingly becoming a greater portion of the foreclosure problem. An estimated 5.5 million homes were in the process of foreclosure in 2009 and 2010, the congressman adds.
Under Fattah’s proposal, a lender would be required to inform a homeowner in mortgage default about the program before the lender can begin foreclosure proceedings.
The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.