As President Obama prepares to announce a program next week to stem the soaring rate of foreclosures, key Democratic lawmakers say they are planning to craft a housing bill that would give the administration the authority it needs to carry out several elements of the initiative.
Obama will unveil the plan Wednesday in Arizona, among the states hardest hit by the housing downturn, White House press secretary Robert Gibbs said yesterday.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said the administration's program would probably require changes to federal law. Some of those are already working their way through Congress. But Frank said he is looking to pull them together into a single housing package.
The legislation would include a provision changing the bankruptcy law to allow judges to modify the mortgages of distressed homeowners, including by reducing the principal of the loan to the property's current market value, he said. This proposal has already gained support from one House committee but drawn fierce objections from Republicans and the financial industry. Though Obama supports this provision, he declined to include it in the stimulus bill approved yesterday, fearing the bankruptcy measure would derail the overall legislation, Democratic congressional sources said.
Another provision, Frank said, would provide legal protection to lenders who reduce interest rates or otherwise modify the terms of troubled loans for homeowners. Some previous foreclosure prevention efforts have been hampered by the threat that investors who own securities backed by the mortgages would sue to block loan modifications, according to the financial services industry
Obama will unveil the plan Wednesday in Arizona, among the states hardest hit by the housing downturn, White House press secretary Robert Gibbs said yesterday.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said the administration's program would probably require changes to federal law. Some of those are already working their way through Congress. But Frank said he is looking to pull them together into a single housing package.
The legislation would include a provision changing the bankruptcy law to allow judges to modify the mortgages of distressed homeowners, including by reducing the principal of the loan to the property's current market value, he said. This proposal has already gained support from one House committee but drawn fierce objections from Republicans and the financial industry. Though Obama supports this provision, he declined to include it in the stimulus bill approved yesterday, fearing the bankruptcy measure would derail the overall legislation, Democratic congressional sources said.
Another provision, Frank said, would provide legal protection to lenders who reduce interest rates or otherwise modify the terms of troubled loans for homeowners. Some previous foreclosure prevention efforts have been hampered by the threat that investors who own securities backed by the mortgages would sue to block loan modifications, according to the financial services industry
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