In a letter to Senate Banking Committee Chairman Chris Dodd (D-CT), Rep. Chaka Fattah (D-PA) asked that new Senate regulations on the financial services industry include Fattah's mortgage relief provisions that are contained in HR 4173, the Wall Street and Consumer Protection Act of 2009. Sen. Dodd is working to introduce the Senate bill this week. If Fattah's provisions are included, and the legislation is passed by the Senate and signed by President Barack Obama, it would clear the way for $3 billion in emergency mortgage assistance to be provided to struggling homeowners.
"Congress must implement measures to ensure the conditions that led to the [financial] crisis will not occur again," Rep. Fattah wrote in his letter to Dodd. "Regulatory reform, however, must begin with correcting the damaged housing market by providing people the tools necessary to keep their homes and prevent foreclosure."
Rep. Fattah noted that foreclosures caused by unemployment are increasingly becoming a greater portion of the foreclosure problem. An estimated 5.5 million homes were in the process of foreclosure in 2009 and 2010.
Rep. Fattah's mortgage relief proposal, which provides low-interest loans to distressed homeowners, was included in the financial regulatory bill that passed the House last December with the support of Chairman Barney Frank of the Committee on Financial Services and Subcommittee Chairwoman Maxine Waters.
Rep. Fattah's tactic of providing emergency relief directly to homeowner's has worked before. As a young state legislator, Fattah authored legislation that created the Homeowners' Emergency Mortgage Assistance Program (HEMAP), the Pennsylvania model upon which the new legislation is based. Since 1983, the state program has distributed over $236 million in emergency mortgage assistance. Most of that money has since been repaid. That success is a microcosm of what can happen on the national level, Rep. Fattah said.
"The Obama Administration, including Treasury Secretary Timothy Geithner and U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan, strongly support the allocation of $4 billion for mortgage relief and neighborhood stabilization efforts that are provided in the House bill," Rep. Fattah wrote in his letter to Sen. Dodd. "Therefore, I urge you to consider similar measures in the Senate bill."