“Foreclosure doesn’t happen overnight,” the U.S. Department of Housing and Urban Development (HUD) states on their Web site. But it still happens too quickly for some owners, a trend a new piece of federal legislation hopes to slow.
Since the housing crisis began in 2007, there have been more than 6.6 million foreclosure filings nationwide—which include all of the various steps a bank takes against a homeowner up to and including final foreclosure—with 5 million foreclosures completed, according to Rep. Elijah Cummings (D-Md.).
Nearly “one out of every 200 homes will be foreclosed upon,” according to the Mortgage Bankers Association. “For a city like Washington, D.C., that translates to 3,000 Washingtonians losing their homes to foreclosure each year.”
With an expected 3 million additional foreclosures this year, Cummings and 20 co-sponsors introduced the Preserving Homes and Communities Act of 2011. The legislation places tighter restrictions on mortgage servicers seeking foreclosure and ensures a “fair playing field for consumers and banks,” Cummings said in a news release.
“The mortgage system is fundamentally flawed,” Cummings said in a conference call. “Hopefully we can get it passed.”
The bill would require lenders and servicers to offer approved mortgage modifications to homeowners who are qualified. The practice of “dual tracking” would be eliminated, in which homeowners who have a loan modification underway also experience foreclosure proceedings at the same time. And those who are denied a loan modification must be given the right to appeal. Likewise, the lender must provide reasons why the application was not granted.
Sen. Jack Reed (D-R.I.) supports the proposed legislation along with more than a dozen consumer groups including the National Fair Housing Alliance and the National Community Reinvestment Coalition.
This week, Cummings asked the Office of the Comptroller of the Currency for details of a comptroller investigation into companies charged with “systematic abuses against homeowners” that are facing foreclosures.
A homeowner can also be granted a HUD-approved housing counselor by calling (800) 569-4287 or by going to www.hud.gov.