The Obama administration is kicking off a new program designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
The Treasury Department on Wednesday released detailed guidelines designed to let the lending industry know how to enroll borrowers in the program announced last month.
To help borrowers determine if they are eligible, the government has put answers to common questions and assessment tools on the Web site www.FinancialStability.gov.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said in a statement.
On Tuesday, key moderate Democrats in the House wrote a compromise to a housing bill that requires bankruptcy judges to consider whether banks offered homeowners reasonable loan restructuring deals before they weigh in with judicial remedies.
The new language is expected to ease the bill onto the House floor for a vote as early as Thursday.
Borrowers also would have a responsibility to prove that they tried to modify their mortgages with their lenders before seeking help in bankruptcy court.
The deal would require judges to consider whether homeowners were offered a "qualified" loan workout - defined as one that would set monthly payments equal to about one-third of a homeowner's income.
Bankruptcy judges would have to deny a judicial mortgage adjustment in cases where the homeowner is deemed able to afford the loan.
The changes bring the legislation closer in line to what President Obama's administration has sought and what the banking lobby finds acceptable. The mortgage industry has argued that unfettered access to bankruptcy court mortgage modifications would impose steep and unpredictable costs on its companies that would be passed along to borrowers as higher fees and interest rates.
Their opposition helped derail the bill last week, even after leading Democrats agreed to restrict it to people who had tried other means of reworking their mortgages and those who couldn't afford their home loans.
(Source: CBS News)
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