SFGate published an excellent article spelling out the various legislation in congress right now. It turns out that the so-called “Foreclosure Prevention” bill is a disaster brought to us by the lobbyists and it looks like it is designed to make the rich richer. We get these quotes on it:
Foreclosure Prevention Act: This bill, which is fairly far along in the political process, would modernize FHA loans, increasing the agency’s mortgage limit to $550,000.It provides funds for pre-foreclosure counseling, and $10.9 billion in mortgage revenue bonds for loan refinancing. It gives $25 billion in tax breaks to home builders, as well as domestic airlines, automakers and other manufacturers. It also encourages purchase of already-foreclosed properties, with $4 billion in grants for communities to buy foreclosures and a $7,000 tax benefit for people who buy them.
The bill has the rare distinction of uniting consumer advocates and conservative economists in disdain. “Big tax breaks for home builders is the centerpiece, which we think is atrocious,” said Paul Leonard, West Coast director for the Center for Responsible Lending. “It’s a triumph of lobbying over need,” said John from the Heritage Foundation. Consumer advocates support the FHA reform and counseling money, though.
What a mess.
The bill that consumer advocates really want is being called the Hope For Homeowners bill. Here is a description:
Lenders would voluntarily submit shoddy mortgages for refinancing, taking a drastic haircut on the amount owed in exchange for a lump-sum payoff. Mortgages would be issued for 90 percent of homes’ current values – which are likely much less than the original amount of the mortgage. The FHA would take part of the new loan as a fee, and then would share in future appreciation. Democrats project the government might lose 1 to 2 percent of the $300 billion if refinanced borrowers later default.
Consumer advocates strongly support the bill, but it draws fierce criticism from the White House and Republicans.
If you are in trouble with your mortgage it looks like the Democrats are your allies right now…