HUD Backs Mortgage Assistance Bill

The U.S. housing chief urged Congress Monday to quickly enact legislation that he said could help stave off distress for homeowners with high-risk mortgages without spending government money.

Mortgage delinquencies and foreclosures have been surging, especially for people with tarnished credit or low incomes who took out high-priced home loans, known as bad credit mortgages, during the housing boom.

That housing market boom has now turned into a slump.

Nearly 2 million adjustable-rate mortgages are resetting to higher rates this year and next, setting up a potential wave of foreclosures that has put policymakers on edge.

Alphonso Jackson, the secretary of housing and urban development, said, referring to the recent crisis in the high-risk home mortgage market:

“We knew that this was coming. We just didn’t know it would come as quickly as it came.”

Jackson said in a speech that “we can address upcoming subprime problems if we have the wisdom to get ahead of the curve. And we had better get ahead of the curve — or we’re going to have serious problems.” About 20 percent of all subprime home loans “are headed for trouble,” he said.

One way to get in front of the problem, he said, is by Congress enacting a long-standing proposal to overhaul HUD’s Federal Housing Administration.

It was not specifically written to respond to the recent crisis in the bad credit mortgage market, but Jackson said the proposal could help it.

Specifically, the tens of thousands of families with subprime, or bad credit home loans, who are looking to into mortgage refinancing now.

The proposal would allow FHA loan alterations, specifically the maximum mortgage amount it can insure in higher-cost areas such as the Northeast, California and the mid-Atlantic.

It is backed by the White House and has garnered support from Democrats in the House, including Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

SOURCE: New London Day