House Committee Supports Housing Recovery Bills

The House Financial Services Committee this week favorably reported two bills dealing with the current housing crisis. The Committee supported H.R. 5579, the "Emergency Mortgage Loan Modification Act of 2008." This bill, sponsored by Reps. Castle (D-PA) and Kanjorski (D-PA), would provide a safe harbor for servicers who undertake mortgage restructuring. NAR supports this bill, and believes it will alleviate reluctance on the part of some loan servicers to write-down or otherwise modify home mortgages. The Committee also supported H.R. 5818, the "Neighborhood Stabilization Act of 2008," sponsored by Rep. Waters (D-CA). This legislation would provide $15 billion in grants and loans to states to purchase foreclosed homes, in an effort to prevent blight.

In addition, the Committee also began consideration of Chairman Frank's (D-MA) bill, HR 5830, the "FHA Housing Stabilization and Homeownership Retention Act of 2008." This bill would create a voluntary program whereby loan servicers could dramatically write-down the value of the mortgage, in return for FHA refinancing. Qualified loans would be written down to a level that homeowners could afford to repay, and FHA would insure the loan. Final Committee action on this bill is expected this week.

It is believed that some of these bills may be included in a Housing Stimulus package being crafted by the House in response to the bill passed by the Senate several weeks ago.