Waters Introduces Bill to Prevent Foreclosures on FHA Borrowers
Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Committee on Financial Services, introduced legislation that would help prevent foreclosures for the Federal Housing Administration’s (FHA) borrowers by strengthening requirements for and increasing oversight of FHA mortgage servicers so that every homebuyer with an FHA mortgage is given a fair chance at avoiding foreclosure.
“A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Ranking Member Waters. “My bill, the FHA Foreclosure Prevention Act, would ensure that FHA servicers help families experiencing financial hardship avoid foreclosure so that they can remain in their homes.”
The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to increase its oversight of FHA mortgage lenders in an effort to strengthen compliance with the FHA’s loss mitigation requirements. This bill would also establish a robust complaint and appeals process to provide borrowers the ability to adequately voice their concerns about unfair treatment. Ultimately, this bill seeks to ensure that FHA borrowers have a fair opportunity to become current after defaulting on their loan.
“As Nevada’s attorney general during the foreclosure crisis, I saw far too many lives turned upside down due to rampant foreclosures, as well as the devastating effects that come with losing one’s home,” said Senator Cortez Masto. “To this day, borrowers are unnecessarily being put at risk of losing their homes because of servicers’ failures to comply with the FHA’s loss mitigation requirements. This bill will implement common-sense measures to give borrowers a fair chance at avoiding foreclosure.”
Both measures are supported by the National Housing Law Project (NHLP) and the National Consumer Law Center (NCLC) on behalf of its low-income clients.
“NHLP supports strengthening HUD's oversight of FHA loan servicers,” said National Housing Law Project Executive Director Shamus Roller. “For too long, homeowners experiencing financial hardship have suffered from the failure of servicers to comply with basic loss mitigation requirements.”
“This much-needed bill will promote sustainable homeownership for low and moderate-income borrowers,” said National Consumer Law Center Attorney Alys Cohen. “By increasing servicer accountability and homeowner communication, this bill will save HUD money by preventing avoidable foreclosures.”