President Barack Obama has signed into law two housing measures aimed at helping distressed homeowners avoid placing their properties on repo home listings. The two laws are not expected to totally eradicate the foreclosure problem but they may contain the growing repo home listings and put a block on fraudulent foreclosure prevention schemes.
The Fraud Enforcement and Recovery Act and Helping Families Save Their Homes Act are part of the Obama Administration’s efforts to stem the flood of foreclosed homes across the country.
Obama said that the legislation will protect hardworking homeowners, crack down on unscrupulous people who will take advantage of troubled borrowers and ensure that the foreclosure problem will never threaten the real estate market again.
The Helping Families Save Their Homes Act integrates the Hope for Homeowners initiative into the Making Home Affordable program. This expanded program offers housing assistance such as refinancing and loan modifications to help distressed homeowners avoid repo homes listings.
The law offers modifications to federal guaranteed farm and rural home loans and Federal Housing Administration (FHA) loans. It also provides comprehensive protection to tenants of foreclosed properties, gives homeowners the right to know the holder of their mortgage, offers resources to homeless and consolidates homelessness programs to make them efficient in providing assistance to troubled families with children.
On the other hand, the Fraud Enforcement and Recovery Act is designed to clamp down on bogus mortgage and foreclosure prevention schemes following the reported 300 percent rise in fraudulent activities.
The law extends federal criminal statutes on bank fraud. Over 50 percent of subprime loans were originated by mortgage lenders not currently insured or regulated by federal law. The law provides fraud enforcement coverage on private mortgage companies and brokers.
Additionally, the law extends mortgage lending manipulation prohibition to private operations and enhances funding for enforcement efforts, including the allocation of $165 million in the next two years to hire prosecutors and investigators to handle fraudulent mortgage and repo home listings prevention cases.
Furthermore, the law strengthens federal enforcement and regulatory capacity by allocating $140 million to the Federal Bureau of Investigation (FBI), $30 million each to the U.S. Postal Inspection Service and the Department of Housing and Urban Development’s Inspector General, $21 million to the Securities and Exchange Commission and $20 million to the Secret Service.
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