• 29
  • July
    2010

Congressman Steve Cohen of Tennessee recently introduced a bill aiming to slow down the foreclosure process and give people an opportunity to save their homes. The bill is called the Preventing Homeowners from Foreclosure Act and it would establish funding for local governments to provide homeowners with the opportunity to use mediation services to delay or prevent foreclosure.

According to Cohen, the current Treasury Department foreclosure prevention program, Home Affordable Modification Program (HAMP), has similar aims, but thus far has not done enough or lived up to its promise. Cohen's bill would also authorize funding for outreach programs to make sure homeowners in need of foreclosure assistance are aware of the program.

The proposed program could be especially helpful to Tennessee residents because foreclosures in this state generally move much faster than in many other places. While a foreclosure action in some places may take up to a year and half before a family is evicted, in Tennessee, the whole process can take just a couple of months.

This difference is that many areas of the country use the judicial foreclosure method, which essentially involves a court reviewing the debt and entering a judgment before the process of selling the home can occur. On the other hand, most foreclosures in Tennessee are out-of-court or non-judicial foreclosures, which do not require the intervention of a court. In that process, a power of sale clause is generally included in the mortgage or deed of trust and allows the lender to sell the home in the event of default as long as certain conditions are met.

If passed, the act would allow local governments to set up mediations between homeowners and mortgage companies, at which time the two sides may be able to work out a repayment plan or some other type of mortgage modification.

The bill was introduced on July 15th and has been referred to the House Committee on Financial Services. We will try to provide updates on this proposed legislation as it moves through Congress.

Related Resources:

Memphis Rep. Steve Cohen files bill to help homeowners facing foreclosure (The Commercial Appeal)