New Housing Law Addresses Foreclosures, but More Help is Needed
Feature Story by Jon Jackson - 8/11/2008
In response to increased pressure to address the housing crisis, Congress recently passed the Housing and Economic Recovery Act of 2008, which President Bush signed into law on July 30.
Among other things, the new law will create a trust fund to help provide affordable housing in high-cost areas, establish a national licensing and registration system to monitor mortgage brokers, provide urban areas with money to rehabilitate foreclosed properties, and expand the authority of the Federal Housing Administration (FHA) to help borrowers refinance into more affordable loans.
Despite the many positive steps the law takes, some civil rights groups have expressed concerns that the bill does not go far enough to help struggling homeowners.
"The new law has a decent carrot to discourage lenders from foreclosing, in the FHA refinancing program," said Rob Randhava, counsel at the Leadership Conference on Civil Rights (LCCR), referring to a provision that provides FHA guarantees for troubled loans if lenders agreed to accept some limited losses up front. "But what's really needed is a stick, to force lenders to be more helpful."
In a July 27 letter to the Senate in support of the bill, LCCR said that homeowners need more options to avoid foreclosures and that a restructuring of the housing market is necessary to level the playing field between borrowers and loan servicers. LCCR had called for an amendment that would have let borrowers go to court to have their mortgages reworked into more affordable terms, but it was left out of the final version of the bill due to stiff opposition from the financial services industry.
"The housing bill is a good step but even so will, at best, help about 500,000 families stay in their homes. That's not enough. The economy will continue to take a beating if we don't do more to stop 6.5 million foreclosures Wall Street analysts expect over the next few years," said Mike Calhoun, President of the Center for Responsible Lending (CRL).
