Helping Families Save Their Homes Act of 2009
Encyclopedia
The Helping Families Save Their Homes Act of 2009 is a recently enacted public law
in the United States
. On May 20, 2009, the Senate bill was signed into law by President Barack Obama
. The stated purpose of the act, a product of the 111th United States Congress
, was to allow bankruptcy
judges to modify mortgages
on primary residences, among other purposes; however, that provision was dropped in the Senate and is not included in the version that was eventually signed into law. In addition, the bill amends the Hope for Homeowners Program as well as provide additional provisions to help borrowers avoid foreclosure.
On May 20, 2009, President Obama signed the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act into law , reauthorizing HUD
's Homeless Assistance programs. It was included as part of the Helping Families Save Their Homes Act of 2009. The HEARTH Act allows for the prevention of homelessness, rapid re-housing, consolidation of housing programs, and new homeless categories. In the eighteen months after the bill's signing, HUD must make regulations implementing this new McKinney program.
In late 2009, some homeless advocacy organizations, such as the National Coalition for the Homeless, reported and published perceived problems with the HEARTH Act of 2009 as a HUD McKinney-Vento Reauthorization bill, especially with regard to privacy, definitional ineligibility, community roles, and restrictions on eligibile activities.
and the collapse
of the American subprime mortgage industry, this bill was introduced by Rep.
John Conyers
(D
-Michigan
) on February 23, 2009. It was then referred to the House Financial Services Committee, the House Judiciary Committee, and the House Veterans' Affairs Committee.
However, on February 25, the House passed a resolution, 224-198, which permitted the Speaker of the House
to declare the House resolved into the Committee of the Whole House
for exclusive consideration of the Helping Families Save Their Homes Act, waiving most points of order against consideration of the bill and all points of order against provisions of the bill.
On February 26, the House considered the bill under the provisions of the resolution passed the previous day, which provided for one hour of general debate. With Rep. José Serrano (D-New York
) designated as chairman of the committee, the House debated the bill for one hour and then left it as unfinished business.
On March 5, the House voted to pass the bill, 234-191, with most Democrats supporting the bill and most Republicans opposing it.
The engrossed House legislation was referred to the Senate Committee on Banking, Housing and Urban Affairs
on March 11, 2009. Similar legislation, and were both introduced on April 27, 2009 since then. On May 6, the Senate passed S.896 on a vote of 91-5. The key difference between H.R.1106 and S.896 is that the latter does not include a controversial cram down
provision, which failed to garner majority support in the Senate. On May 19, the House approved an amended version of S. 896 by a 367-54 vote, with one member voting "present". The Senate promptly approved the House's amendment, and President Obama signed the bill into law the next day.
," which would allow judges to modify the rights of a mortgage holder, whether that mortgage holder is a primary lender or an investor in a mortgage backed security, with regard to delinquent mortgages on primary residences if the borrower has entered Chapter 13 bankruptcy proceedings. Among other modifications, the bill would allow bankruptcy judges to reduce the principal amount contractually owed by the borrower under the original mortgage. Proponents of cram down, chiefly Democrats, have cited studies saying that the provision could have helped 20% of homeowners facing foreclosure
s stay in their homes.
This provision drew extensive criticism because it would have allowed borrowers to abdicate their contractual obligation to repay the full amount of their loan. Many argued that cram down would have made it more costly for other individuals to purchase a home because lenders would have had to increase interest rates and down payments to supplement the loss from the loan modification. Opposition to cram down stalled H.R. 1106 and led to the introduction of S.896, which does not include cram down, in its place.
Public law
Public law is a theory of law governing the relationship between individuals and the state. Under this theory, constitutional law, administrative law and criminal law are sub-divisions of public law...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. On May 20, 2009, the Senate bill was signed into law by President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
. The stated purpose of the act, a product of the 111th United States Congress
111th United States Congress
The One Hundred Eleventh United States Congress was the meeting of the legislative branch of the United States federal government from January 3, 2009 until January 3, 2011. It began during the last two weeks of the George W. Bush administration, with the remainder spanning the first two years of...
, was to allow bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
judges to modify mortgages
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
on primary residences, among other purposes; however, that provision was dropped in the Senate and is not included in the version that was eventually signed into law. In addition, the bill amends the Hope for Homeowners Program as well as provide additional provisions to help borrowers avoid foreclosure.
On May 20, 2009, President Obama signed the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act into law , reauthorizing HUD
United States Department of Housing and Urban Development
The United States Department of Housing and Urban Development, also known as HUD, is a Cabinet department in the Executive branch of the United States federal government...
's Homeless Assistance programs. It was included as part of the Helping Families Save Their Homes Act of 2009. The HEARTH Act allows for the prevention of homelessness, rapid re-housing, consolidation of housing programs, and new homeless categories. In the eighteen months after the bill's signing, HUD must make regulations implementing this new McKinney program.
In late 2009, some homeless advocacy organizations, such as the National Coalition for the Homeless, reported and published perceived problems with the HEARTH Act of 2009 as a HUD McKinney-Vento Reauthorization bill, especially with regard to privacy, definitional ineligibility, community roles, and restrictions on eligibile activities.
Legislative history
In the wake of the bursting of the United States housing bubbleUnited States housing bubble
The United States housing bubble is an economic bubble affecting many parts of the United States housing market in over half of American states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and may not yet have hit bottom as of 2011. On December 30, 2008 the...
and the collapse
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
of the American subprime mortgage industry, this bill was introduced by Rep.
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
John Conyers
John Conyers
John Conyers, Jr. is the U.S. Representative for , serving since 1965 . He is a member of the Democratic Party...
(D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
-Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
) on February 23, 2009. It was then referred to the House Financial Services Committee, the House Judiciary Committee, and the House Veterans' Affairs Committee.
However, on February 25, the House passed a resolution, 224-198, which permitted the Speaker of the House
Speaker of the United States House of Representatives
The Speaker of the United States House of Representatives, or Speaker of the House, is the presiding officer of the United States House of Representatives...
to declare the House resolved into the Committee of the Whole House
Committee of the Whole (United States House of Representatives)
In the United States House of Representatives, the Committee of the Whole, short for Committee of the Whole House on the State of the Union, is a parliamentary device in which the House of Representatives is considered one large congressional committee...
for exclusive consideration of the Helping Families Save Their Homes Act, waiving most points of order against consideration of the bill and all points of order against provisions of the bill.
On February 26, the House considered the bill under the provisions of the resolution passed the previous day, which provided for one hour of general debate. With Rep. José Serrano (D-New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
) designated as chairman of the committee, the House debated the bill for one hour and then left it as unfinished business.
On March 5, the House voted to pass the bill, 234-191, with most Democrats supporting the bill and most Republicans opposing it.
The engrossed House legislation was referred to the Senate Committee on Banking, Housing and Urban Affairs
United States Senate Committee on Banking, Housing, and Urban Affairs
The United States Senate Committee on Banking, Housing, and Urban Affairs has jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes,...
on March 11, 2009. Similar legislation, and were both introduced on April 27, 2009 since then. On May 6, the Senate passed S.896 on a vote of 91-5. The key difference between H.R.1106 and S.896 is that the latter does not include a controversial cram down
Cram down
A cram down or cramdown is the involuntary imposition by a court of a reorganization plan over the objection of some classes of creditors.-Home mortgage loans:...
provision, which failed to garner majority support in the Senate. On May 19, the House approved an amended version of S. 896 by a 367-54 vote, with one member voting "present". The Senate promptly approved the House's amendment, and President Obama signed the bill into law the next day.
Provisions
The Helping Families Save Their Homes Act will:- Expand eligibility for Chapter 13 bankruptcy by excluding home mortgage debt from the current maximum debt limitations.
- Authorize the Secretary of Housing and Urban Development to pay out all or some of the balance owed on any Federal Housing AdministrationFederal Housing AdministrationThe Federal Housing Administration is a United States government agency created as part of the National Housing Act of 1934. It insured loans made by banks and other private lenders for home building and home buying...
-insured loans that are modified under the legislation. - Expand the HOPE for Homeowners program
- Provide a legal safe harbor from liability for lenders that enter into loan modifications or workouts with borrowers. (Under current law, lenders that have packaged and sold one or more mortgages to investors as securities may be held liable for losses suffered by the investor as a result of the loan modification.)
- Extend increased Federal Deposit Insurance CorporationFederal Deposit Insurance CorporationThe Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
(FDIC) and National Credit Union AdministrationNational Credit Union AdministrationThe National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...
(NCUA) deposit insurance limits until December 31, 2013. (The Emergency Economic Stabilization Act temporarily increased the FDIC and NCUA limits from $100,000 to $250,000 in 2008, but those increases were scheduled to expire on December 31, 2009.)
Cram down
H.R. 1106 contains a provision, frequently called "cram downCram down
A cram down or cramdown is the involuntary imposition by a court of a reorganization plan over the objection of some classes of creditors.-Home mortgage loans:...
," which would allow judges to modify the rights of a mortgage holder, whether that mortgage holder is a primary lender or an investor in a mortgage backed security, with regard to delinquent mortgages on primary residences if the borrower has entered Chapter 13 bankruptcy proceedings. Among other modifications, the bill would allow bankruptcy judges to reduce the principal amount contractually owed by the borrower under the original mortgage. Proponents of cram down, chiefly Democrats, have cited studies saying that the provision could have helped 20% of homeowners facing foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
s stay in their homes.
This provision drew extensive criticism because it would have allowed borrowers to abdicate their contractual obligation to repay the full amount of their loan. Many argued that cram down would have made it more costly for other individuals to purchase a home because lenders would have had to increase interest rates and down payments to supplement the loss from the loan modification. Opposition to cram down stalled H.R. 1106 and led to the introduction of S.896, which does not include cram down, in its place.