Servicer Safe Harbor Bill Sent To Obama

67-54 vote, the House of Representatives has passed the [link=http://www.house.gov/apps/list/press/financialsvcs_dem/press051909.shtml][u]Helping Families Save Their Homes Act[/u][/link], S.896, sending the bill to President Obama for signature. The bill amends Hope for Homeowners (H4H), extends the temporary increase in deposit insurance coverage for both the Federal Deposit Insurance Corp.'s (FDIC) insurance fund and the National Credit Union Administration's (NCUA) share insurance fund to $250,000, and offers a safe harbor for servicers performing modifications according to Treasury guidelines. In regard to H4H, S.896 reduces fee levels, provides greater incentives for servicers to engage in modifications under the program and reduces administrative burdens to loan underwriters. The increase in coverage for the FDIC fund and the NCUA fund is currently scheduled to expire Dec. 31, and the bill extends the increase through 2013. Under the legislation, the FDIC's borrowing authority would increase to $100 billion (with a temporary increase until the end of 2010 to $500 billion). NCUA would be provided an increase to $6 billion, with a temporary increase to $30 billion. Neither the FDIC nor the NCUA has ever used this borrowing authority, the amounts for which have not changed in years. Tenants stand to receive protections under the bill in cases where a property is being foreclosed. Also included in the legislation is a clarification regarding the Neighborhood Stabilization Program (NSP). States that receive the minimum allocation of NSP funding and have otherwise fulfilled the targeting requirements of the program, will be able to distribute any remaining funding to areas with homeowners at risk of foreclosure or in foreclosure, S.896 sas. Speaker of the House Nancy Pelosi lauded the passage, but noted the absence of bankruptcy cramdown legalization – an amendment defeated in the Senate. "I am disappointed that the Senate failed to include crucial mortgage bankruptcy provisions that would have prevented more foreclosures, but this legislation is critical to strengthening our economy by stabilizing the housing market," she said in a statement. SOURCE: House Committee Financial Systems, Office of Nancy

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