Sen. Carper Supports Home Foreclosure Prevention Bill

Senate's Major Housing Relief Bill Includes Carper Amendment To Provide Up To $75 Million Annually To Help American Homeowners Refinance Their Home Mortgages

WASHINGTON — Sen. Tom Carper (D-Del.) is a strong supporter of the Foreclosure Prevention Act of 2008 (H.R. 3221) that passed the Senate today, 84-12, and includes several key mortgage relief provisions sponsored by the Delaware senator to help struggling homeowners in Delaware and nationwide.

“This housing bill builds on our recent economic stimulus legislation by tackling some problems spawned by the home foreclosure crisis that threatens America’s hard-working families, our communities, and local and national economies,” said Sen. Carper, a key member of the Senate Banking Committee. “This bipartisan agreement to help address the nation’s housing crisis includes important provisions to provide counseling to Americans facing foreclosure; help local communities deal with properties in their neighborhoods that are abandoned or foreclosed; and reform the Federal Housing Administration so that more Americans have access to affordable, safe, government-backed loans.”

The senator stressed that passage today of this housing relief bill is the latest step in ongoing federal actions to help stabilize the nation’s financial and housing markets and to shore up consumer confidence. This important bipartisan effort builds upon Federal Reserve actions to cut interest rates and shore up the financial markets, and the recent enactment of the economic stimulus legislation that includes rebate checks going out to many American taxpayers this spring.

Sen. Carper authored one of only a few amendments ultimately accepted into this larger Senate housing bill – the Federal Home Loan Bank Affordable Housing Amendment. Under current law, the 12 federal home loan banks are required to set aside a portion of bank profits for affordable housing programs. 

Sen. Carper’s amendment, which was cosponsored by Sen. Mike Crapo, R-Idaho, would make up to $75 million from that affordable housing account available to assist low-income homeowners looking to refinance their mortgages in the wake of the subprime credit scandal and the slumping housing market. This change could benefit up to 5,000 low-income families but would cost the U.S. taxpayer nothing because the funds are generated by the profits of the federal home loan banks.  

“This amendment would provide real dollars to people who need it most – without costing U.S. taxpayers a dime,” said Sen. Carper. “It’s real relief and should benefit the people who need it most – those borrowers who may have been victims of predatory subprime loans or who find themselves under water thanks to declining home values.”

Sen. Carper was also an original co-sponsor of an amendment authored by Missouri Democratic Sen. Claire McCaskill that helps protect American’s seniors who have fallen victim to predatory reverse home mortgages. It requires the Department of Housing and Urban Development to fund counseling on reverse mortgages and provide regulations to protect seniors from unsuitable and exotic financial products.

Sen. Carper was a vocal advocate to modernize and expand the Federal Housing Administration (FHA) to ensure that more families can benefit from safe, fixed-rate mortgages. The FHA modernization component of this legislation, which passed overwhelming on its own late last year, will increase the FHA loan limit from $360,000 to $550,000, require a low down payment of only 3.5 percent, provide mortgage counseling and streamline the FHA bureaucracy.

“Homeowners in Delaware and nationwide will have greater access to low-cost, government-based mortgages by making FHA again a primary mortgage source for working Americans, minorities and first-time homebuyers seeking the American dream of homeownership,” Sen. Carper said. “This measure will revitalize FHA so that low-income homebuyers have a safe, government-backed alternative to risky subprime, predatory loans that have failed them.”

Other key elements of the Foreclosure Prevention Act of 2008, which must now be approved by the U.S. House of Representatives, will:

  • Increase mortgage foreclosure protections for members of the armed services.
  • Help communities impacted by foreclosures by allowing localities with high foreclosure rates to access $4 billion in Community Development Block Grants (CDBG) funds to purchase foreclosed properties for rehabilitation, rent or re-sale.
  • Help families keep their homes by increasing pre-foreclosure counseling funds, expanding refinancing-opportunities, and amending the bankruptcy code to allow the modification of nontraditional and subprime mortgages on primary residences.
  • Help families avoid foreclosure in the future by amending the Truth-in-Lending Act to improve loan disclosures during the original loan and refinancing process.
  • Provide tax relief for homeowners, homebuyers, and homebuilders to help the housing market recover. To encourage the purchase of homes already in foreclosure or about to be foreclosed, this provision provides a $7,000 tax credit for buyers to be claimed over two years as long as new buyers lives in the home.
  • Provide $10 billion for federal, tax-exempt mortgage revenue bonds to help homeowners refinance subprime loans for first-time homebuyers and multifamily rental housing.