The Helping Families Save Their Homes Act passes the Full House 234-191

Washington, D.C.--Congressman Eliot Engel voted this week to bring hope to families facing foreclosure. With a record 5.4 million homeowners either behind on payments or in foreclosure at the end of 2008, the Helping Families Save Their Homes Act will put in place a key first piece of President Barack Obama’s comprehensive Homeowner Affordability and Stability Plan.

The legislation allows bankruptcy judges to modify existing mortgages for families who file for Chapter 13 bankruptcy as an incentive to spur lenders into voluntarily modifying loans. It also gives lenders the confidence to modify loans by protecting them from some lawsuits. In addition, it spurs mortgage refinancing by fixing the Federal Housing Administration’s Hope for Homeowners Program by reducing fees and offering new incentives for lenders.

“Once a house goes into foreclosure it not only devastates a family, but it also adversely affects the neighborhood and often leads to a downward spiral of property values in the area. This legislation gives families the same rights to keep their home when facing bankruptcy as the investors and speculators who own multiple houses. This plan does not spend a single federal dollar and yet it could keep hundreds of thousands of families in their homes and free from foreclosure,” said Rep. Engel.

The President announced details of his plan this week, including a website, www.financialstability.gov, with an eligibility quiz for homeowners struggling to make their payments.

Chapter 13 bankruptcy filing is a last resort for many families who are unable to make ends meet in the midst of this recession. It is a strict and intrusive process that forces a family to open their finances up to the scrutiny and management of the courts for up to five years.

“According to RealtyTrac, New York State foreclosure-related filings rose 29 percent in 2008. There were over 50,000 filings in the state with over 5,000 in Bronx, Rockland and Westchester Counties. In Westchester, the numbers were sobering – a 79 percent increase from 2007 (http://www.banking.state.ny.us/pr090123e.pdf). People are hurting and this legislation is a crucial step in the overall recovery of our economy. More than 14 million homeowners nationwide owe more on their mortgage than their home is worth, and therefore refinancing is not an option. The task is clear – stabilizing the housing market is central to restoring our economy,” said Rep. Engel.

He added, “I am proud to support this legislation and to work with President Obama to help the millions of American families struggling through this crisis to avoid losing their homes.”