House Passes Housing Reform Bill with Cao Amendment to Provide Counseling for At-Risk Borrowers
Washington, DC – June 11, 2010 – (RealEstateRama) — The U.S. House of Representatives passed the FHA Reform Act of 2010, a bill meant to bolster the Federal Housing Administration and help prevent another housing crisis.
The Act will empower FHA to improve its financial position by allowing the agency to adjust its premium structure for new borrowers, while still providing affordable mortgage insurance to the individuals FHA is intended to serve including low-income and minority borrowers and individuals in traditionally underserved areas. The bill now goes to the Senate for further consideration.
Before passing the Act on a vote of 406 to 4, the House approved by voice vote an amendment by Congressman Anh “Joseph” Cao (LA-02), requiring the government to make at-risk borrowers aware of the availability of counseling on credit risk, financial management, loan modification and other issues related to home buying.
Speaking on the House floor in favor of the amendment, Cao said “As someone from a district that is both in recovery and one with incredible housing needs, I especially appreciate this bill.” Cao elaborated, “I know that many times, especially in the current economic downturn, people headed for foreclosure face many debt issues. Low and middle-income families, those most likely to have FHA loans, often don’t know that there is counseling available to help them understand the credit risks associated with loan modification. Many do not have the skills to manage this risk. They don’t know that there is often free or low-cost management – financial management information for them. That’s why I drafted the additional language to help those families get information…”
According to housing industry figures, foreclosure filings in the U.S rose 16% in the first quarter of this year compared to the same period last year, and bank seizures hit a record as lenders stepped up action against delinquent homeowners. A total of 932,234 homes, or one out of every 138 households, received a default or auction notice or were repossessed by banks.