Winegar, Wilhelm, Glynn & Roemersma, P.C.
Call now to schedule a free initial consultation.
  • 908-454-3200Phillipsburg, NJ
  • 610-807-0440Bethlehem, PA
  • 908-475-2500Belvidere, NJ

Will new laws rescue homeowners?

Both the House and Senate have been working separately on legislation aimed at rescuing struggling homeowners during the recent foreclosure crisis. The thrust of both plans is to expand government mortgage insurance. When facing a foreclosure, a borrower could refinance into a government-guaranteed 30-year fixed rate mortgage under specific conditions that include the home being the owner's primary residence and the holder of the existing mortgage accepting 85% of the home's present apprais al value as payment in full.

The difference between the two plans arises with regard to funding. Under the House plan, $1.7 billion from the federal budget would be required to set up the program that would be administered by the Federal Housing Administration. It is estimated that more than 500,000 mortgages would be refinanced over the next 5 years at a total expense of $2.7 billion to taxpayers. This type of taxpayer funding has been highly criticized by a vast number of Republicans, including the President, who feel the funds will serve as a bailout, as much of the money finds its way into the hands of real estate speculators and irresponsible lenders. If such a plan did make it out of the House the President has vowed to veto it.

On the other hand, the Senate has negotiated a more bipartis an plan. The money to start up the program is pulled from an "affordable housing fund", capitalized by Fannie Mae and Freddie Mac by collecting less than half a cent on every dollar of mortgages purchased by those companies. It is estimated that $500 million would be pulled from the "affordable housing fund" to set up the program. It would run for only 3 years, yet still refinance about the same number of mortgages as the House plan. After the expiration of the foreclosure aid period, the "affordable housing fund" would continue to exist and be funded in the same manner in order to construct affordable housing, such as low income rental housing.

The Senate plan has not been met with as much scrutiny because it is not dependant on a direct taxpayer cost; even the President has said he is willing to take a look at the plan if and when it makes it out of Committee. So as foreclosure and unemployment rates continue to rise, as more people feel the pinch created by sky-rocketing gas prices, expect something to come out of Washington to ease some homeowner's struggles. After all, there is a federal election looming. [THE FOREGOING IS A GENERAL DISCUSSION OF THE LAW AND SHOULD NOT BE CONSIDERED AS LEGAL ADVICE. SHOULD YOU HAVE A SPECIFIC QUESTION, PLEASE CONTACT OUR OFFICE OR MAKE AN APPOINTMENT].

No Comments

Leave a comment
Comment Information

Our Team will help protect your rights & ensure a fair trial

Request a free consultation

Request A Free Consultation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Phillipsburg Office
305 Roseberry Street
Phillipsburg, NJ 08865

Phone: 908-454-3200
Fax: 908-454-3322
Map & Directions

Bethlehem Office
84 East Broad Street
Bethlehem, PA 18018

Phone: 610-807-0440
Fax: 908-454-3322
Map & Directions

Belvidere Office
110 Mansfield Street
Belvidere, NJ 07823

Phone: 908-475-2500
Fax: 908-454-3322
Map & Directions