Washington, DC – July 9, 2009 – (RealEstateRama) – Congressman Steve Cohen (TN-9), Chairman of the Subcommittee on Commercial and Administrative Law (CAL), today held a hearing on the Obama Administration’s plan to help homeowners on the brink of foreclosure. The President’s plan allows struggling homeowners to voluntarily modify their mortgage payment.
“Nowhere have the effects of the mortgage foreclosure crisis been more acutely felt than in my district. In Memphis, the dream of homeownership has turned into a nightmare of adjustable interest rates and roller coaster monthly mortgage payments. Millions of American families need similar relief, but I’m concerned that the government’s efforts so far may not be working as well as it could,” Congressman Cohen said. “We need to be prepared to act more aggressively to help distressed homeowners. Evidence suggests that encouraging voluntary modifications alone is, at best, minimally effective in helping financially struggling borrowers stay in their homes. We can and should be prepared to do more.”
In a survey of the top 100 metro areas nationwide, Memphis ranked 18th in the number of foreclosures according to data collected by RealtyTrac.com. In a similar comparison of states, Tennessee ranked 12th in the number of foreclosures. The extent of the foreclosure crisis is such that all socioeconomic classes are affected by growing foreclosure numbers.
According to the Center for Responsible Lending there have already been between 1 million and 1.5 million foreclosures since the start of 2009. The Federal Reserve estimates that by the end of the year, as many as 2.5 million to 3 million foreclosures could occur.
To help reverse this trend and help struggling homeowners the Obama Administration created the Home Affordable Mortgage Program (HAMP) that encourages voluntary mortgage mediation by banks and loan officers to help distressed families. HAMP allows lenders to reduce monthly payments for troubled borrowers to 38% of the borrower’s gross monthly income. The Treasury Department would then subsidize a further reduction of the monthly payment to 31% of a borrower’s monthly income. Today’s hearing examined the effectiveness of that program.
Congressman Cohen has advocated for a more aggressive approach to helping homeowners. Earlier this year, he cosponsored and helped champion legislation authored by Judiciary Chairman John Conyers (D-MI) which, among other things, would have given authority to bankruptcy judges to modify debtors’ mortgage terms in bankruptcy, including a reduction of the mortgage principal amount.
The CAL Subcommittee and the full Judiciary Committee have been examining the foreclosure crisis since 2007, holding no fewer than 4 hearings on the issue and 2 markups of legislation designed to address that crisis.
Congressman Steve Cohen (TN-9)
1005 Longworth House Office Building
Washington, DC 20515
Main: 202-225-3265 <!– document.write( ” ); //–>