Gov. Strickland Supports Plan to Apply Ohio Model to Federal Efforts
Washington, D.C. – Congresswoman Betty Sutton this week introduced two bills that will help homeowners who have been hit hard in the recent mortgage crisis.
“The American Dream isn’t just a distant fantasy,” said Sutton. “And it should never be a nightmare. But too many people in my home state of Ohio – and all across this nation – have seen their dreams shatter as predatory lenders stalk unwary buyers and the mortgage market buckles. We have a responsibility to all Americans to ensure that owning a home won’t leave families at the mercy of a broken system.”
Foreclosure Prevention and Homeownership Protection
The Foreclosure Prevention and Homeownership Protection Commission Act creates a Federal commission charged with analyzing the underlying causes of the current subprime mortgage crisis, and recommending legislative and regulatory actions that would help homeowners avoid foreclosure and unfair rate increases.
“This issue is much more basic, more fundamental than partisan politics,” Sutton said. “We need a bipartisan commission with the expertise and authority to find the causes of the current crisis, and to offer up real solutions. Congress has already taken action to address some of the immediate causes of this crisis, but we must also find the root causes and come up with long-term solutions. There’s no reason to keep patching a broken system if we can repair the system from the inside out.”
The commission would be composed of thirteen members, including executives from Fannie Mae and Freddie Mac, and the Secretary of Housing and Urban Development. Other members would be appointed by leaders of both parties in the House and the Senate. It would be based in part on the successful model created by Ohio Governor Ted Strickland, who has given his support to Sutton’s initiative.
“In representing a state that has been hit particularly hard by foreclosures, Congresswoman Sutton understands first-hand the devastating effects of this crisis on our homeowners,” said Governor Strickland. “Ohio’s Foreclosure Prevention Taskforce, created in March, has been instrumental in studying and providing solutions to an escalating foreclosure problem in our state, and I strongly support Congresswoman Sutton’s efforts to establish a commission to address these issues on a national level.”
Ohio’s Foreclosure Prevention Taskforce gave its recommendations to the Governor earlier this month.
Fair Disclosure for Homeowners
Sutton’s second bill, the Fair Disclosure for Homeowners Act, would deal directly with adjustable-rate mortgages (ARMs).
“Many homeowners with ARMs are being caught by surprise when their monthly mortgage payments increase sharply overnight,” said Sutton. “Mortgage rate sneak attacks are bringing a lot of suffering and hardship to American families. This bill would require creditors to send a notification, separate from their monthly mortgage statements or any other notices, to homeowners holding ARMs six months before rates are due to change.”
The notification would include the creditor’s best estimate of the homeowner’s new monthly payments. It would also include contact information for Federal and state government agencies that homeowners can contact to get help, as well as a list of options homeowners can pursue if they anticipate they will have difficulty meeting their payment obligations after the rate resets.
Finally, the bill would require creditors to include the date of reset on all monthly statements, paper or electronic.
Both bills were introduced during the same week that the Judiciary Subcommittee on Commercial and Administrative Law met to investigate key aspects of the current mortgage crisis. The subcommittee considered the cause and scope of the subprime mortgage crisis, and worked to identify potential solutions, particularly in the context of bankruptcy law.
Sutton believes Congressional hearings are necessary to find solutions and maintain the accountability of the Federal government, but that a dedicated commission is necessary to develop a comprehensive strategy for assisting homeowners. The Foreclosure Prevention and Homeownership Protection Commission established by Sutton’s bill would report back to the President and Congress within 180 days. It will consider not only potential Federal responses, but also the roles to be played by state governments. Recommendations for revising lending practices, government and private accountability, and analysis of the financial impact of the current crisis could be included in the commission’s final report.