Foreclosure-prevention legislation introduced Monday by the chairman of the Senate Banking Securities and Insurance Subcommittee would beef up funding for HUD-approved financial counseling agencies and help states establish their own programs.
The Homeownership Protection and Enhancement Act of 2007, or HOPE Act, would also provide nearly $300 million for revolving loan funds that states could use to subsidize loans for families facing foreclosure.
In introducing the bill in the Senate on Monday, Sen. Jack Reed, D-R.I., said it would help states establish and enhance outreach programs to identify homeowners at risk of losing their homes and help them avoid foreclosure.
The outreach programs would “reach out to delinquent borrowers, offer them access to financial counseling, and, when appropriate, help them negotiate a plan to restructure their debt,” Reed said. States would be rewarded for setting up effective foreclosure-prevention program with additional funding and resources.
The HOPE Act would provide $50 million for the creation and operation of state home-ownership protection centers, and $260 million for revolving loan funds that would allow the centers to offer one-time grants or subsidized loans to qualified families, Reed said.
SB 1386 would also increase funding, to $300 million, for HUD-approved counseling agencies, and set aside $5 million for the creation of a federal database on defaults and foreclosures to improve oversight of public and private foreclosure prevention efforts.
Sen. Charles Schumer, D-N.Y., has proposed a similar initiative that would provide $300 million to nonprofit groups that help troubled borrowers.
Schumer’s initiative also includes proposed legislation, The Borrower’s Protection Act of 2007, SB 1299, which would extend federal enforcement of the Truth in Lending Act to all mortgage brokers and non-bank loan originators.