WASHINGTON D.C – March 25, 2010 – (RealEstateRama) — Congressman Chaka Fattah (D-PA), author of major legislation to provide emergency mortgage assistance to unemployed homeowners who face foreclosure, praised steps by major banks in recent days to aid homeowners with “underwater” and distressed mortgages.
“These new programs announced by Bank of America, Citigroup and others are a breath of fresh air from our major financial institutions,” said Fattah, chairman of the Congressional Urban Caucus and a member of the House Appropriations Committee’s subcommittee on financial services. “These programs are steps in the right direction. That is a significant and welcome change of direction for finding creative solutions to the mortgage crisis to maintain the American dream of home ownership.”
Fattah is author of the Homeowners Emergency Mortgage Assistance program (HEMAP) in the financial services overhaul legislation that won approval in the House of Representatives and is pending in the Senate. Fattah, as a young state legislator in Pennsylvania in 1983, designed and won passage for the Pennsylvania Homeowners Emergency Assistance Program that has successfully helped tens of thousands of unemployed homeowners meet mortgage emergencies and remain in their homes.
Bank of America announced yesterday it will cut the principal up to 30 percent on severely “underwater” adjustable rate mortgages. This will affect some homes that, due to plunges in home values, are now worth less than their outstanding mortgage.
Today Citigroup, one of the nation’s largest mortgage servicers, announced it will take part in a government initiative known as the 2MP program to help borrowers modify second mortgages. Citigroup joins JPMorgan Chase, Wells Fargo and Bank of America participating in 2MP.
“Our financial giants and mortgage lenders have properly been criticized for policies that led to and deepened the crisis in home ownership. As Congress and the Obama Administration move forward with appropriate corrections, we need to recognize these programs from the private sector that are helping get the job done,” Fattah said.
Fattah’s HEMA program would provide $3 billion in emergency mortgage assistance for unemployed homeowners.
“There’s broad agreement that a major threat to homeowners today is loss of their homes because of unemployment and job distress through no fault of their own,” Fattah said. “Our program is a game changer, especially for struggling homeowners in our cities and rural areas and for minorities.”
In Pennsylvania, unemployed and financially distressed homeowners have received $236 million since 1983 under the widely praised and imitated HEMAP program. Most of these loans have been repaid.