Center for Responsible Lending: The Housing Plan: New Hope for Stopping the Foreclosure Epidemic

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This is from an email sent out by the Center for Responsible Lending

The Housing Plan: New Hope for Stopping the Foreclosure Epidemic

This week President Obama announced an ambitious plan to address the housing crisis that represents a huge step forward for the country. Thanks to all of you who have worked—many for years!—to highlight the economic destruction of bad lending and the need to stop the foreclosure epidemic. The Administration has responded with a responsible approach and effective new options for reducing the massive foreclosures that triggered today's economic crisis.

It's proactive. In addition to providing more options for homeowners facing foreclosure now, it also will help millions of families who aren't in trouble yet, but who are at high risk. Their risk is our risk, as continuing foreclosures hurt everyone.

It's market savvy. The plan brings the interests of homeowners and business closer together by giving loan companies financial incentives to work with their customers to avoid unnecessary foreclosures. It also recognizes the importance of ensuring that loan modifications are affordable, practical and sustainable.

And it's comprehensive. It will benefit households from across the economic spectrum and provide new optimism for a future with stronger communities.

In short, this plan is an investment in correcting the results of bad lending and turning the economy around. (For more details, click here to see our issue brief.)

http://www.responsiblelending.org/issues/mortgage/solutions/highlights-of-the-new-housing-plan.html

Some specific highlights include:

The plan commits $75 billion with the goal of helping 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. It does this through a range of financial incentives to encourage lenders to modify loans, including a shared effort to reduce monthly payments for at-risk homeowners.

It incorporates "pay for success" incentives such as compensating servicers for successful modifications and offering borrowers who make payments on modified mortgage on time direct assistance to reduce their principal obligation.

It requires lenders receiving TARP funds to follow U.S. Treasury Department guidance on loan modifications.

It reaffirms support for lifting the ban that prevents homeowners from seeking loan modifications through the bankruptcy courts. This action will not require any tax dollars, and it will also provide a greater incentive for servicers to modify loans outside of bankruptcy court.

Please note that Congress will need to approve the action to allow judicial loan modifications. We have asked for your help before in urging Congress to approve this measure, and we need your calls and letters now more than ever.

Please write or call your representative today and urge them to support court-supervised loan modifications for homeowners who could manage an affordable loan, and who have no other option for avoiding foreclosure. It is especially important to preserve the ability of homeowners to seek loan modifications in bankruptcy court. Tell Congress:

1) Support the Homeowner Affordability and Stability plan.

2) Help the economy get back on track.

3) Support the "Helping Families Save Their Homes in Bankruptcy Act of 2009" (S. 61/H.R. 200).

Thanks to all of you who have already taken time to write letters. Members need to hear from you again! Please send the message that the economy will remain weak until the foreclosure epidemic ends.