Proposed Law for Federal Loans for the Unemployed Who Can't Make Their Mortage Payments

HERE IS AN AP NEWS REPORT THAT MAY OFFER A GLIMMER OF HOPE:

Rep. Barney Frank said Monday that he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay their mortgages.

The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default.

Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job. “These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment,” said Frank, DMass.

Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.

Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.

It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year. On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.