H.R. 3221
The Legislation:
The Foreclosure Prevention Act of 2008 authorizes federal bankruptcy courts to modify mortgage payments due on homeowners’ primary residences, a practice which is barred by current law. Title IV of the bill, also known as the Helping Families Save Their Home in Bankruptcy Act, would permit bankruptcy courts to restructure the debt on home mortgages by setting interest rates and principal at commercially reasonable market rates and extending repayment periods.
The Foreclosure Prevention Act provides $4 billion to state and local governments for the rehabilitation and resale of abandoned and foreclosed homes via the Community Development Block Grant Program.
The bill also directs $200 million to NeighborWorks, a nonprofit organization whose mission is to create affordable housing, for counseling activities to prevent home foreclosures. Additionally, the legislation authorizes state housing finance agencies to use proceeds from mortgage revenue bonds to refinance subprime loans.
The bill increases the ceiling for each state’s issuance of such bonds by $10 billion. The act strengthens the disclosure requirements for mortgages by compelling lenders to inform borrows of the maximum monthly payment they would be required to make on their loans and restricts lender fees. Finally, in an unrelated provision, the Foreclosure Prevention Act provides tax breaks to corporations.
- H.R. 3221 sponsored by Nancy Pelosi