First Menendez Bill Introduced In 111th Congress: Help For Homeowners On The Verge Of Foreclosure

Washington - U.S. Senator Robert Menendez (D-NJ), a member of the Senate Banking Committee, today introduced his first piece of legislation in 111th Congress: the Home Retention and Economic Stabilization Act, which would defer foreclosure activity for up to nine months for certain responsible homeowners who are struggling with bad home loans. The bill, which was introduced in the House of Representatives by Rep. Doris Matsui (D-CA), would apply to homeowners making less than a certain income and would require them to continue to make mortgage payments and remain responsible during their deferment period.

"Among all of our efforts to stabilize the economy, we can't forget that the root of this crisis is the tsunami of foreclosures that has hit American homeowners," said Senator Menendez. "Homeowners who see their homes slipping away deserve to finally have a real helping hand extended to them. This is not only about keeping families in their homes, this is about stabilizing the economy. The ripple effects of a foreclosure spread to neighborhood property values, to local government budgets, to Wall Street and eventually to the national and global economies. We need to stop this where it begins."

Center for Responsible Lending president Michael Calhoun said: "A timeout on foreclosures is a necessary, common-sense stop-gap measure that will give lawmakers, regulators and homeowners some breathing space while everyone works to craft a fair, sensible and lasting solution to the foreclosure crisis at the heart of the economic meltdown."

Alys Cohen of the National Consumer Law Center said: "A temporary stop on foreclosures is essential. As defaults and foreclosures escalate, policymakers need time to pass further foreclosure prevention measures. Foreclosure deferment will ensure that homeowners don't unnecessarily lose their homes when help is on the way."

Hilary O. Shelton, the NAACP Vice President for Advocacy and the Director of the NAACP Washington Bureau, said: "Home foreclosures are distressing American individuals, families and neighborhoods. The fact that African Americans and other racial and ethnic minorities were targeted by the nefarious peddlers of sub-prime loans means that our communities are being especially hard hit by the unprecedented wave of foreclosures that is threatening the very well-being of our nation. That is why the NAACP called for a moratorium on home foreclosures as far back as April of 2007, and why we whole-heartedly support the reintroduction of this vital legislation by Congresswoman Matsui and Senator Menendez in the 111th Congress."

Summary of the Home Retention and Economic Stabilization Act:

To qualify for the nine month deferment period, the homeowner must:
1) Have an owner-occupied mortgage, including a Sub-prime or Payment Option Arm Mortgage. Investors are excluded.
2) Earn 200% or below Area-Medium Income.
3) Must have hit an interest rate reset or 60 days or more in default on their mortgage.

If the homeowner qualifies, they must:
1) Continue making their monthly payment amount that was due during the introductory period of the mortgage.
2) Must stay in contact with their lender or servicer during deferment period.
3) Continue to maintain their property.

If homeowner fails to do any of the above three requirements, they are out of the deferment period.

If homeowner and lender or servicer reach an agreement on new, affordable mortgage terms, that is deemed acceptable by the Chair of the FDIC, then the deferment period ends for homeowner.

Foreclosure statistics:

• It is projected that that U.S. home foreclosures will reach 8.1 million in the four years, up from the previous forecast of 6.5 million (Credit Suisse)
• To date there are 53,091 New Jersey foreclosure properties. (RealtyTrac)

Groups in support of Home Retention and Economic Stabilization Act:

The Center for Responsible Lending, AARP, National NeighborWorks Association, Consumer Federation of America, American Federation of Government Employees, AFL-CIO, AFSCME, American Federation of Teachers (AFT), IBEW, UAW, Communications Workers of America (CWA), National Education Association (NEA), SEIU, United Steelworkers, Brotherhood of Railroad Signalmen, Leadership Conference on Civil Rights, National Council of La Raza, NAACP, Black Leadership Forum, National Fair Housing Alliance, Jewish Labor Committee, Jewish Council for Public Affairs, Asian American Justice Center, Community Action Partnership, and National Rural Housing Coalition.

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