(Washington, DC) Today, Congressman John Yarmuth (KY-3) voted in favor of legislation that would prevent an estimated 1,769 Louisville homes from falling into foreclosure by making it easier for lenders and homeowners to modify existing mortgages. 

 “This legislation takes critical steps to stem foreclosures and prevent a freefall of home values throughout our community.  It is an important step in our nation’s economic recovery, and it gets there without spending a dime of taxpayer money Congressman Yarmuth said.”

The Helping Families Save Their Homes Act encourages lenders to modify loans by protecting them from lawsuits, reducing fees that have discouraged modification in the past, and offering new incentives to negotiate loan modifications with borrowers at risk of foreclosure.

A record 5.4 million homeowners are either behind on payments or in foreclosure, and one in six Kentucky homeowners now owes more money than the house is worth. 

The Helping Families Save Their Homes Act will begin puts in place the first step in President Obama’s comprehensive Homeowner Affordability and Stability Plan.  The President announced details of his plan yesterday, including a website, www.financialstability.gov, with an eligibility test for homeowners struggling to make their payments.

The bill also gives bankruptcy judges the authority to modify existing mortgages for families who file for Chapter 13 bankruptcy as an incentive to spur lenders into voluntarily modifying loans.   Judges have long had such authority for second homes and other property, but were prevented from modifying principle residences.

This legislation is critical to the overall recovery of our economy.  Home prices dropped 18 percent in the last quarter of 2008.  More than 14 million homeowners owe more on their mortgage than their home is worth, and they cannot refinance.  Many are facing foreclosure through no fault of their own. This is an important step in helping America recover.

“When a home falls into foreclosure it lowers the property values in the entire area.  Stemming this crisis is critical to the wellbeing of all working families and to getting our economy back on track,” Yarmuth said.

The legislation passed the House tonight and must be approved by the Senate before it can be sent to President Obama’s desk.