Rep. Gary Peters Says Bipartisan Legislation Could Help More Homeowners Avoid Foreclosure
The 9th District Congressman was in Farmington Hills today to push the Preserving American Homeownership Act, which would reward those who make regular mortgage payments with principal reduction.
If you're making mortgage payments on a home that's "under water," help may be on the way.
Congressman Gary Peters (D-9th District) today visited GreenPath Debt Solutions, a Farmington Hills nonprofit, to promote the Preserving American Homeownership Act. The bill, which Peters said has bipartisan support, would help homeowners by reducing the principal on their loans when they make regular payments.
"We have people who are struggling to make their payments and are very fearful that they will be losing their home and going into foreclosure," he said. "We know that foreclosure doesn't just impact that family, it impacts that neighborhood."
The proposed legislation would allow lenders and loan servicers to reduce the principal on a loan for homeowners who are approaching foreclosure, with no other alternative to lower their payments.
"What will happen is if they continue to make payments on that property, they will immediately see the loan value drop to 115 percent ... and if they continue to make those payments over a three year period, it'll be staggered... and then drop to 95 percent over home value," Peters said.
If the homeowner later sells the home for a profit, that profit is shared 50/50 with the lender, Peters added. He called it a "common sense approach," and Philip Seaver of Farmington Hills-based Seaver Title Company agreed.
"It is a realistic program," he said. "From the investor view point, it provides a rate of return, or potential rate of return, as the values come back."
Seaver said home values are essentially capped when foreclosed properties are included as appraisers look at comparable sales in a neighborhood. "We welcome the opportunity to have less foreclosures, less overgrown lots, less 'blighted' properties," he said.
Oakland County Treasurer Andy Meisner said the foreclosure crisis has cost the county about $14 billion in taxable value, "and really the bulk of that is the result of the foreclosure crisis."
GreenPath president and CEO Jane McNamara said principal reduction provides incentives for homeowners to stay in their homes, and not walk away because they owe more than the home is worth. She said "drastic action" is needed to "protect the American dream and stabilize our neighborhoods, and this is a step in the right direction."