President Barack Obama signed a new mortgage bill into law on Wednesday encouraging lenders to spare homeowners from foreclosure and take action on predatory lending practices. The new law is expanding on previous foreclosure prevention programs which were not living up to the numbers it had projected to help.
According to the Associated Press,
The law — officially called the Helping Families Save Their Homes Act — expands an existing $300 billion program that encourages lenders to adjust a mortgage if the homeowner agrees to pay an insurance premium. The program, set to expire in 2011, would swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.
Because of strict eligibility requirements, only about 50 homeowners are refinancing through the program compared to the 400,000 people it was estimated to help.
“Too many administrative and technical hurdles made it very difficult to navigate, and most borrowers didn’t even bother to try,” Obama said. “And this bill removes those hurdles, getting folks into sustainable and affordable mortgages and, more importantly, keeping them in their homes.”