Helping Families Save Their Homes Act of 2009



Summary
According to the House Committee on Financial Services, major provisions in the bill as introduced in February 2009 include:


 * Allowing bankruptcy judges to modify the terms on principle residence mortgages that meet certain criteria spelled out in the bill. This is also referred to as "cram-down."


 * Helping veterans avoid foreclosures by allowing the Department of Veterans Affairs and other agencies to guarantee mortgages that are modified in or out of court.


 * Providing legal safe harbor from liability to mortgage servicers who modify loans in order to prevent foreclosures, regardless of any provisions in a servicing agreement.


 * Reducing fees and provides other incentives for mortgage lenders to participate in the Hope for Homeowners program that was authorized by the Housing and Economic Recovery Act of 2008.


 * Making permanent the temporary increase in deposit insurance coverage limit for the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) from $100,000 to $250,000.

...and more It combines provisions from several separate bills, including H.R.200, H.R.786, H.R.787 and H.R.788.

House
On February 26, 2009 the House of Representatives began consideration of the bill, but postponed all votes on amendments and passage until the following week. A group of moderate Democrats, led by Rep. Ellen Tauscher (D-Calif.), chairwoman of the New Democrat Caucus, sought changes to the provision allowing bankruptcy judges to modify the terms of mortgages on primary residences.

After a week of negotiations, the House reached a compromise to be introduced as an amendment to H.R. 1106. Some key provisions in the new measure:


 * Homeowners would be required to seek a voluntary loan modification from their lender 30 days before applying for one in court
 * Judges would be required to take into account a person's income when deciding whether to reduce the interest or the principal on the loan
 * Loans could be reduced only to the "fair market value" of the home according to federal appraisal guidelines and the restructured loan would be designed to pay off as much of the original loan as possible.

Commenting on the compromise, Rep. Tauscher told the New York Times, "Our intention was to make sure this was available but as a last resort."

On March 5, 2009, the House voted on the compromise amendment sponsored by Rep. Zoe Lofgren. It passed by a vote of 263-164.



Later that day, the House passed the amended version of the bill by a vote of 234-191. 

External resources

 * Douglas W. Elmendorf, CBO Director's blog on the cost of H.R. 1106


 * "House Dems Letter On Cramdown Compromise", letter to House colleagues from Zoe Lofgren (D-Calif.), Ellen Tauscher (D-Calif.), and Dennis Cardoza (D-Calif.) on H.R. 1106, reproduced at Talking Points Memo.