WASHINGTON (3/14/08)—House Financial Services Committee Chairman Barney Frank Thursday announced an economic, mortgage and housing “rescue proposal” the Massachusetts Democrats is crafting to stem the rising flow of mortgage foreclosures. Frank outlined the parameters of his proposal, but advised that he is still drafting language of a bill he intends to introduce. He said he will be seeking input and comments regarding the proposal over the next few weeks. The legislation would address increasing mortgage foreclosures by allowing the Federal Housing Administration (FHA) to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. Franks program would permit the FHA to provide perhaps up to $300 billion in new guarantees to help refinance at-risk borrowers into viable mortgages. In exchange for the acceptance of a substantial write-down of principal, the existing lender or mortgage holder would receive a short payment from the proceeds of a new FHA loan if the restructured loan would result in terms that the borrower can reasonably be expected to pay, according to a release from the chairman’s office. The bill is also expected to broach the following areas:
* Eligibility requirements for existing loans; * Requirements for new FHA-insured loans: * Coordination of existing lien-holders; and * Improving FHA capacity, among other things.
“Chairman Frank has indicated that he would like comment and input on this proposal during the March District Work Period, so we are going to take a look at it over the next few weeks," said Ryan Donovan, vice president of legislative affairs for the Credit Union National Association. Use the resource link below to read Frank’s release addressing his plan.