Rep. Maxine Waters, chairwoman of the Subcommittee on Housing and Community Opportunity and most senior member of the Financial Services Committee from the state of California, has introduced the Systematic Foreclosure Prevention and Mortgage Modification Act of 2008 (H.R. 7326).
The legislation is designed to dramatically reduce the number of foreclosures by establishing a systematic approach to modifying troubled mortgages. Mortgage servicers would be paid $1,000 for each modification, and the government would share up to 50% of any loss if a modified loan redefaults.
The cornerstone of the plan is the requirement that participating servicers must systematically review all loans in their portfolios. Each loan will be subjected to a net present value test to determine whether it is more beneficial to modify or to foreclose, and loans that would benefit more from modification must be modified.
Source: Office of Rep. Maxine Waters