In an attempt to prevent foreclosures on the Federal Housing Administration’s borrowers, Democrats introduced a new bill in Congress.
Rep. Maxine Waters, D-Calif., Ranking Member of the Housing Committee on Financial Services, introduced new legislation that would strengthen the requirements for and increase oversight on FHA mortgage servicers.
“A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” Waters said. “My bill, the FHA Foreclosure Prevention Act, would ensure that FHA servicers help families experiencing financial hardship avoid foreclosure so that they can remain in their homes.”
The FHA Foreclosure Prevention Act of 2018, H.R. 5555, would require the U.S. Department of Housing and Urban Development to increase its oversight of FHA mortgage lenders in order to ensure compliance with the FHA’s loss mitigation requirements.
The bill would also establish a complaint and appeals process for borrowers who feel they are facing unfair treatment.
But Waters isn’t the only one pushing this bill. Sen. Catherine Cortez Masto, D-Nev., introduced a companion measure, S. 2698, in the Senate – a bill which Sen. Elizabeth Warren, D-Mass., was an original co-sponsor of.
“As Nevada’s attorney general during the foreclosure crisis, I saw far too many lives turned upside down due to rampant foreclosures, as well as the devastating effects that come with losing one’s home,” Cortez Masto said.
“To this day, borrowers are unnecessarily being put at risk of losing their homes because of servicers’ failures to comply with the FHA’s loss mitigation requirements,” she said. “This bill will implement common-sense measures to give borrowers a fair chance at avoiding foreclosure.”
And some low income law centers are already voicing their support for the bills.
“NHLP supports strengthening HUD's oversight of FHA loan servicers,” said Shamus Roller, National Housing Law Project executive director. “For too long, homeowners experiencing financial hardship have suffered from the failure of servicers to comply with basic loss mitigation requirements.”
The National Consumer Law Center agreed, saying it will promote sustainable homeownership.
“This much-needed bill will promote sustainable homeownership for low and moderate-income borrowers,” NCLC Attorney Alys Cohen said. “By increasing servicer accountability and homeowner communication, this bill will save HUD money by preventing avoidable foreclosures.”