On April 24, 2008, the House Financial Services Committee began holding bill markups on HR 5830.

The NC Housing Coalition has been working on improving housing counseling in NC since 2000.  Four years ago we helped design and launch a program that provides housing counseling and mortgage assistance to those facing foreclosure due to job loss.  The current housing crisis further emphasizes the importance of having quality housing counseling available to both homebuyers and those facing foreclosure.

While we think HR 5830 is a valuable bill, we have changes to recommend that we know will improve the impact Congress wants to have in this important matter. 

1)    We have worked with the NC Housing Finance Agency to help get the funding for housing counselors made available through Neighborworks Grants out to counseling agencies.  We have learned from talking to counseling agencies that the structure and timing of funding makes it difficult to hire additional staff to increase capacity for providing mortgage foreclosure mitigation counseling.  Since current funding is limited to December 31, 2008, it is difficult for agencies to hire qualified staff for only 8 months.  In addition, with limited operating budgets, many agencies cannot afford the upfront costs of hiring and training additional counselors. 

We would recommend changing the program so that funding is designed to enable counseling agencies to hire additional staff.  This could be accomplished by extending current and future funding through the end of 2009, and by allowing some of the funds to be used for at least the first two months salary of additional housing counselors.  These changes would make the program more valuable and increase capacity and availability of foreclosure mitigation counseling. 

One of our key partners in our Foreclosure Prevention Project is NC Legal Aid and the other Legal Services agencies in NC.  Their ability to get loan servicers to work with households facing foreclosure is critical to preventing financial disaster and the loss of the home.  Without this legal assistance most loan servicers will not work with housing counselors in good faith. 

2)    The Senate amended HR 3221 to provide $30 million in aid for funding for legal service providers, however, it was amended with the limitation that “Provided further, That no funds provided under this Act shall be used to provide, obtain, or arrange on behalf of a homeowner, legal representation involving or for the purposes of civil litigation.”  This limitation significantly undercuts the ability of attorneys to defend homeowners against improper foreclosures.  In NC, foreclosure hearings are considered civil court actions and if this limiting language is included, attorneys will not be able to defended homeowners against pending foreclosures.  It is critical that there be no limitation on attorneys engaging in civil litigation.

3)    Finally, one of the most valuable benefits that homeowners could receive at this time is changes to the bankruptcy laws so that bankruptcy judges can modify home loans.  We know this has been a controversial amendment but believe strongly that this should be reinstated so that tens of thousands of homes (the only residence these families have) can be saved in bankruptcy.