Senate Democrats Hammer Out Foreclosure Assistance Bill
A leading member of the Senate Banking Committee is drafting legislation that aims to assist Florida mortgage borrowers now facing foreclosure.
Sen. Jack Reed expects to have the legislation drafted in the next few weeks and is seeking input from community groups who help troubled borrowers, a source familiar with the plan said.
Subprime borrowers with damaged credit have recorded higher delinquencies and foreclosures in recent months. Those foreclosures are expected to climb as the low, early payments on those loans give way to higher Florida mortgage rates.
While he has not released details of his proposal, Reed is seeking advice on the legislation from several consumer groups, the sources said.
The National Community Reinvestment Coalition is pushing lawmakers to create a national mortgage rescue fund to help troubled borrowers and wants mortgage lenders to delay foreclosure action until a loan is more than 60 days late.
“We are worried that lenders are rushing to foreclose before a consumer has had a chance to sustain homeownership,” said David Berenbaum, the consumer group’s policy chief.
The liberal Center for American Progress has pushed for extending mortgage assistance programs and mortgage help for some low-income borrowers.
Reed is hosting a meeting next Monday with several public interest groups to discuss details of the bill. As chairman of the Banking Committee’s securities and investment panel, Reed will convene a hearing tomorrow on how the secondary market has contributed to the subprime crisis.
Other Democratic lawmakers are planning their own subprime legislation that could both bail out troubled borrowers and change Florida home mortgage loan lending regulations.
Subprime bailout? $120 billion
Last week, Sen. Charles Schumer, chairman of the Banking Committee’s housing panel, said he would propose bailout legislation to give “hundreds of millions” of dollars in aid to help homeowners save their homes.
Also Tuesday, the chairman of the House Financial Services Committee will hold a hearing on “Possible Responses to Rising Mortgage Foreclosures.”
Committee Chairman Barney Frank, of Massachusetts, will hear from the chiefs of mortgage finance companies Fannie Mae and Freddie Mac about what they can do to help staunch rising foreclosures.
Fannie Mae Chief Executive Daniel Mudd and Freddie Mac CEO Richard Syron are due to testify along with Brian Montgomery, chief of the Federal Housing Administration. Federal Deposit Insurance Corp. Chairwoman Sheila Bair is also due to testify Tuesday, along with several consumer advocacy groups.
SOURCE: CNN Money
