Washington, D.C. -  Today, Congressman Joe Donnelly joined Financial Services Committee Chairman Barney Frank in introducing the Federal Housing Authority (FHA) Stabilization and Homeownership Retention Act. This bill would assist homeowners facing foreclosure and ease them into viable mortgages that are mutually agreed upon with the lender.

“I am happy to join Chairman Frank in introducing this bill which we believe provides a mutually beneficial solution to help homeowners facing foreclosure stay in their homes and to help lenders avoid serious foreclosure fees,” Donnelly said. “We must stabilize the housing market, and this bill is an important first step.” 

If passed, this bill would create an expanded FHA voluntary refinance program, which would permit FHA to provide up to $300 billion in new guarantees to help refinance at-risk borrowers into viable mortgages. Only primary residences will qualify, and the bill is structured in a way that will not incentivize future defaults. The government would only have liability in very rare cases when a borrower defaults and the amount recovered in foreclosure is below the outstanding principal.

“In 2007 alone, 53,000 homes received foreclosure notices in Indiana, up 74 percent from the number of notices in 2005.  Foreclosed homes are a nightmare for families, harm lenders, and undermine neighboring real estate values.  And the effects on our economy are disastrous.  We must take action to help Hoosiers stay in their homes.  For homeowners, this bill would mean a second chance, an opportunity to work with their lenders to find an alternative to foreclosure.”

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