October 11, 2007
Washington, D.C. -- Congressman Steve Chabot (R-Cincinnati) has introduced legislation to help ensure that thousands of Ohio families do not lose their home to foreclosures in the midst of the current housing troubles. The legislation is being backed by a coalition of consumer groups advocating on behalf of homeowners.
This week, Chabot introduced H.R. 3778, the HOMES Act, to amend the federal bankruptcy code and make additional changes to help prevent unfair foreclosures on the primary residences of low and middle-income consumers, some of whom may have been the victims of unscrupulous lending practices.
“Many homeowners are facing challenges in today’s uncertain housing market,” Chabot stated. “This legislation is intended to help homeowners avoid foreclosure and keep their homes. There is a disparity in the bankruptcy code that should be fixed to prevent unnecessary hardship.”
Under current law, homeowners facing bankruptcy cannot renegotiate the mortgage on their primary residence to a fair market price. The HOMES Act would authorize bankruptcy judges to revalue a primary residence based on its actual market value as opposed to an inflated appraised price often used for mortgage closings. In addition, H.R. 3778 would give judges the authority to delay, modify or prohibit late fees, penalties and mortgage rate increases sought by lenders while the homeowner is in bankruptcy proceedings.
Chabot’s proposal comes at a critical time for Ohio homeowners. In August, the state of Ohio experienced a 33.6 percent increase in home foreclosures from the previous month and a 138.3 percent increase from August 2006. In total, it is estimated that 17,800 homes went into foreclosure last month in Ohio. Nationally, statistics indicate that more than 2.2 million families around the country have been severely impacted by the recent changes in the housing market.