The Senate has approved legislation that’s intended to revive the little-used Hope for Homeowners FHA refinance program by providing incentive payments to loan servicers and originators.

S 896, the Helping Families Save Their Homes Act, would also create a legal "safe harbor" for loan servicers who modify loans, protecting them from lawsuits by investors in mortgage-backed securities.

Loan refinancings and modifications are at the heart of the Obama administration’s "Making Home Affordable" plan, which seeks to help 9 million distressed homeowners avoid foreclosure.

The Senate has approved legislation that’s intended to revive the little-used Hope for Homeowners FHA refinance program by providing incentive payments to loan servicers and originators.

S 896, the Helping Families Save Their Homes Act, would also create a legal "safe harbor" for loan servicers who modify loans, protecting them from lawsuits by investors in mortgage-backed securities.

Loan refinancings and modifications are at the heart of the Obama administration’s "Making Home Affordable" plan, which seeks to help 9 million distressed homeowners avoid foreclosure.

The older Hope for Homeowners loan refinance program, which was supposed to help 400,000 borrowers refinance into more affordable loans by late 2011, has done little business since kicking off in October.

Borrowers who hope to refinance into one of the program’s FHA-guaranteed loans can do so only if their existing lender agrees to write down their loan principal. The Hope for Homeowners program will only back loans equal to 90 percent of a home’s current appraised value.

S 896 would lower program fees, streamline borrower certification requirements, and allow the secretary of Housing and Urban Development to make incentive payments to loan servicers and originators who participate in the program.

Other provisions of the bill include:

  • $130 million for foreclosure-prevention efforts such as counseling and the hiring of fair-housing field employees.
  • Foreclosure protections for renters living in foreclosed homes providing 90 days’ notice.
  • A $2.2 billion authorization for homeless programs.

The Senate passed the bill in a 91-5 vote Wednesday.

The House approved its version of the bill, HR 1106, on March 5 in a 234-191 vote. That version of the bill would also have allowed bankruptcy judges to modify mortgages to keep homeowners out of foreclosure (see story).

Lending industry opponents who argued the controversial "cram down" provision would raise the cost of mortgage loans for all borrowers prevailed in a previous Senate vote. In a 45-51 vote, the Senate on April 30 rejected an amendment to S 896 that would have given bankruptcy judges more limited cram-down powers.

Differences between HR 1106 and S 896 must now be ironed out in a conference committee. Speaker of the House Nancy Pelosi, D-Calif., has reportedly indicated that cram-down language in HR 1106 will be stripped to reflect the Senate vote on the issue.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
The best of real estate is gathering in Las Vegas NEXT month! Grab your ticket before prices go up on October 1.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription