Introduces third bill aimed at protecting homeowners
WASHINGTON, D.C. – April 1, 2008 – U.S. Senator George V. Voinovich (R-OH) today continued his ongoing fight for real congressional action to ease the foreclosure crisis by introducing the Protecting American Homeowners Act of 2008. This is his third piece of legislation focused on not only helping to ease the current crisis but also on providing additional tools for neighborhoods to revitalize and restore abandoned properties.
“Americans are struggling and they are looking to Congress to take real action to help protect homeowners,” Sen. Voinovich said. “We need to provide relief directly to homeowners by safeguarding them from unfair penalties stuck in the fine print by lenders. We need additional resources for rehabilitating foreclosed properties and for housing counseling to ensure homeowners can get the help they need. This bill is a solid step in the right direction, especially compared to the other proposals on the table.”
Sen. Voinovich’s Protecting American Homeowners Act of 2008 would work as a substitute bill to Sen. Harry Reid’s bill, S.2636, the Foreclosure Prevention Act of 2008, which includes irresponsible provisions that would eventually raise interest rates on hard-working Americans. Sen. Voinovich’s bill, which is fully offset, works to provide immediate relief by:
- Extending for one year (through 2010) the tax penalty exclusion for mortgage debt cancellation (which was originally instituted by Sen. Voinovich’s Mortgage Cancellation Relief Act which was signed into law in December 2007);
- Imposing a two-year moratorium on prepayment penalties;
- Simplifying mortgage documents to ensure Ohioans understand clearly the terms of their mortgage;
- Providing $200 million in appropriations for financial counseling programs;
- Providing $1 billion in appropriations for Community Development Block Grant funding targeted towards revitalizing residential areas; and
- Requiring Government Sponsored Enterprises (such as Fannie Mae and Freddie Mac) to register with the Security and Exchange Commission (SEC) and put SEC fees into a permanent financial counseling and foreclosure prevention fund.
Sen. Voinovich has already successfully passed two pieces of federal legislation in the U.S. Senate to address the mortgage crisis. Both of these pieces of legislation will be tools that families can use to work through the foreclosure crisis and preserve their homes as well as their communities.
The first piece of legislation, the Mortgage Cancellation Relief Act, passed the Senate and House and has been signed into law by the president. Sen. Voinovich was moved to draft this bill after hearing stories about how homeowners were working out deals with their lenders, and the lenders were forgiving part of the mortgages to make payments more affordable. He was then shocked to learn the IRS was taxing that loan forgiveness as income. This additional tax liability – which can add up to tens of thousands of dollars – actually penalizes those who are trying to work out their financial problems in a responsible manner. Altering this tax penalty encourages homeowners and lenders to work together voluntarily so that payments are manageable and foreclosure can be avoided. So far, this is the only bill to become law that directly attempts to ease the foreclosure crisis.
Sen. Voinovich’s second piece of legislation, the Expanding American Homeownership Act, was passed overwhelming by the House and was largely adopted by the Senate Banking Committee in its Federal Housing Administration (FHA) Modernization Act, which passed the Senate. This bill will allow Americans facing foreclosure or resetting interest rates to refinance without the usual burdens associated with a FHA loan by increasing and simplifying FHA’s loan limits. The differences between the House and Senate bills are currently being worked out and Sen. Voinovich is hopeful that a final bill will be sent to the president soon for his signature.
“I look forward to a continuing federal, state and local partnership in search of additional ways to address the foreclosure crisis and ensure the American dream of homeownership remains an achievable goal,” Sen. Voinovich said.
