Bill to Help Curb the Growing Bank Foreclosure List

by Simon Lindsay on Foreclosure Help

U.S. Senator Jack Reed has proposed a law that aims to curb the growing number of properties on bank foreclosure list. The bill is proposed in an effort to abate the rapid spread of foreclosures across the country and at the same time help stabilize the housing markets.

The bill gives hope to thousands of distressed families who want to remain on their homes and to communities that are badly hit by the foreclosure crisis.

Under the proposed Preserving Homes and Communities Act of 2009, all qualified homeowners will be evaluated and offered mortgage modifications. The law also establishes a program that will provide mortgage payment assistance to distressed homeowners.

Additionally, the law proposes to provide incentives to local and state governments to motivate them to develop mediation programs that will allow troubled homeowners and servicers to negotiate and create alternatives to help curb the growing bank foreclosure list.

Reed explained that the foreclosure crisis has left many American families devastated and homeless, crippled local communities and neighborhoods and further dragged down the already sick economy.

He said that despite federal, state and local efforts to prevent the spread of foreclosures, the problem continues to grow rapidly. Industry experts said that the current foreclosure rate surpassed the numbers for last year by almost a third.

They said that even homeowners who have fixed-rate mortgages are finding difficulty paying their mortgages and are at risk of losing their homes to foreclosures.

They predicted that the number of troubled loans could increase to almost four million in 2009. Additionally, fixed rate loans accounted for a third of the total repossession starts filed in from April to June of this year. This means that one out of eight homeowners has missed at least one payment.

Durbin believed that the economic crisis could not be resolved unless the housing market has been stabilized. He explained that the proposed law would force lenders to workout with troubled homeowners to modify their loans.

The bill also proposes to expand the loan modification of the government to allow more homeowners to avoid bank foreclosure list and to require banks and lenders to offer approved mortgage modifications to all borrowers who qualify.

Co-sponsors of the bill are Senators Sheldon Whitehouse, Dick Durbin and Jeff Merkley.

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