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Mortgage Bill Now Law

Mortgage Bill Now LawPresident signs Helping Families Save Their Homes Act of 2009

May 20, 2009

By staff

New legislation signed into law today improves the Hope for Homeowners Program, increases protections for servicers and makes it harder for bad actors to originate loans insured by the Federal Housing Administration. Another new law provides hundreds-of-millions of dollars for mortgage fraud.President Barack Obama today signed S. 896, the Helping Families Save Their Homes Act of 2009, according to an announcement from the U.S. Department of Housing and Urban Development.

“This law improves FHA’s Hope for Homeowners Program, making it a more flexible and attractive option,” HUD Secretary Shaun Donovan said in the statement. “By reducing the cost of this program and easing the eligibility requirements, we believe Hope for Homeowners is better able to help struggling families.”

He added that the new law enables FHA lenders to offer more substantial loan modifications like those offered under the Making Home Affordable program.

Donovan noted that the act gives FHA more authority to prevent “bad actors” from offering FHA programs. It also provides additional enforcement tools to police lenders that use false or misleading marketing tactics.

The National Association of Mortgage Brokers threw its support behind the act, which it said imposes stricter requirements for FHA approval “to prevent predatory lending entities from entering the FHA mortgage market.”

NAMB also said the legislation will enhance credit liquidity by increasing the borrowing authority for the Federal Deposit Insurance Corporation, the National Credit Union Administration and HUD.

The American Bankers Association, in its own statement, said that increasing the FDIC’s borrowing authority to $100 billion enabled a reduction to the proposed special premium assessment on all banks.

The ABA said the deadline to restore the deposit insurance fund was extended to eight years from five years, ensuring banks will have adequate resources as they rebuild the fund.

“ABA is thankful to both the House and Senate for moving quickly on this bill,” the statement said.

The Mortgage Bankers Association hailed the passage of the law.

The trade group praised “modest but important servicer liability protections.”

A statement from House Speaker Nancy Pelosi, which indicated the bill passed the House by a vote of 367 to 54, praised the passage but expressed disappointment over the removal of a cramdown provision. Mortgage bankers had vehemently opposed the measure, which would have empowered bankruptcy judges to modify mortgages on primary residences.

The president also signed S. 386, the Fraud Enforcement and Recovery Act.

MBA said the Fraud Enforcement and Recovery Act increases resources to fight mortgages fraud and includes $245 million for law enforcement tied to fraud.

“This bill nearly doubles the FBI’s mortgage and financial fraud program, allowing it to better target fraud in hard-hit areas,” Obama said in a White House statement. “These landmark pieces of legislation will protect hardworking Americans, crack down on those who seek to take advantage of them, and ensure that the problems that led us to this crisis never happen again.”

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