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Baca Sponsors Legislation to Prevent Foreclosures



Bill Would Create Emergency Federal Loan Modification Program
Washington, DC – Today, Congressman Joe Baca (D-Rialto) introduced legislation in the House of Representatives to create a new office within the Treasury Department, the Family Foreclosure Rescue Corporation (FFRC), to help families suffering through mortgage delinquency. The Family Foreclosure Rescue Corporation Act establishes an office responsible for financing loans to people currently in foreclosure or in serious default using funds from the Trouble Asset Relief Program (TARP).
“The current mortgage crisis has hurt too many families and children in the Inland Empire and across the nation,” said Rep. Baca. “My legislation can help reverse this trend, and keep families in homes by providing immediate assistance to those who are already suffering through foreclosures.”
The Family Foreclosure Rescue Corporation Act is modeled after a concept instituted by President Franklin Roosevelt during the Great Depression. President Roosevelt established the Home Owner’s Loan Corporation to provide emergency refinance assistance to families who could no longer make their mortgage payments.
In the midst of a new financial crisis, when many mortgage payments have ballooned past affordable levels, the FFRC will function under the same principle, giving authority to the Treasury to purchase and insure home mortgages to preserve home ownership. Under the bill, the FFRC will implement a systematic plan to maximize loan modifications in order to minimize foreclosures by reducing interest rates, writing down principal sums owed, providing guarantees, and using other measures.
“Predatory lending and greed caused this current housing crisis,” commented Rep. Baca. “Our government has an obligation to lend a helping hand – to stop our families from becoming homeless and to keep our children’s futures safe and financially secure. By giving borrowers an alternative to unaffordable balloon payments, this bill will keep more families in their homes.”
The Family Foreclosure Rescue Corporation Act gives the Treasury Department the authority to use TARP funds to implement a systematic loan modification program. Under this legislation the FFRC has the authority to purchase whole loans and mortgage backed securities. Congress intended for the original TARP to include assistance for troubled homeowners, but the Treasury Department did not implement the provisions as such. By providing relief to homeowners and further preventing foreclosures, the Family Foreclosure Rescue Act returns original Congressional intent to the remaining $350 billion in TARP funds.

“Our nation is suffering through its greatest financial calamity since the Great Depression,” concluded Rep. Baca. “TARP funds were originally intended to assist embattled homeowners and fight the spread of foreclosures. By providing mortgage assistance, this legislation puts the TARP back on track to help American families, and bring economic stability back to our communities and neighborhoods.”