The Helping Families Save Their Homes Act of 2009, PL 111-22, was signed by the President on May 20.  This new law contains protections for renters and reauthorizes the McKinney-Vento Homeless Assistance Programs. The Act had bipartisan support, passing the Senate by a vote of 91-5 on May 6, and the House 367-54 on May 19.
Until now, housing foreclosure legislation has focused almost solely on homeowners and lenders.  This law provides needed protection for renters in foreclosed properties. Unless the purchaser of the foreclosed property intends to use it as their primary residence, renters in the properties must be allowed to remain in their units for the duration of their lease with the prior owner and be given 90-days’ notice before an eviction can proceed.  Even if the remaining period on the lease is less than 90 days, the tenant must be given a 90-day notice before eviction proceedings.  If the tenant has a rental voucher through the federal Section 8 subsidized housing program, the new owner must honor the voucher and accept the assistance payment that is in place, but can proceed to eviction, again after 90 days’ notice.

Congress has been struggling for several years to reauthorize the McKinney-Vento Homeless Assistance Programs.  In early April, the House and Senate each introduced nearly identical versions of the Homeless Emergency Assistance and Rapid Transition to Housing Act (HEARTH) to reauthorize McKinney-Vento.  These provisions were included as an amendment in PL 111-22.  A number of improvements over current law were included. The legislation provides greater resources to communities to prevent those at risk of becoming homeless (including people with extremely low incomes who are doubled up, living in a hotel or in precarious housing situations).  Local rural communities are given greater flexibility in utilizing McKinney funds. The definition of homeless is expanded to include people who are losing their housing in the next 14 days and who lack resources or support networks to obtain housing, as well as families and youth who are persistently unstable and lack independent housing.  The legislation consolidates the Supportive Housing program, Shelter Plus Care, and the Moderate Rehabilitation/Single Room Occupancy Program into a single Continuum of Care program that will allow communities to apply to one program rather than three different ones, reducing administrative burden and increasing flexibility and local decision-making.  In addition, the new law continues to provide incentives for developing permanent supportive housing and dedicated funding is continued for permanent housing renewals.

The core of PL 111-22 aims to make it easier for homeowners with 30-year fixed mortgages insured by the Federal Housing Administration (FHA) and who are on the brink of foreclosure to participate in the Hope for Homeowners program passed last summer.  Despite huge increases in foreclosures, that program has been seldom utilized because of restrictive eligibility requirements.  The bill gives the government flexibility to lower homeowners’ yearly insurance premium rates to FHA.  It protects lenders and servicers of loans from liability if certain criteria are met during the loan modification process. Further, it eliminates the requirement that properties purchased under HUD’s Neighborhood Stabilization Program, which provides grants to buy foreclosed and abandoned properties, must be bought at less than their appraised value.  In a disappointment to consumer advocates, a provision in an earlier House version of the bill that would have allowed bankruptcy courts to modify the terms of residential mortgages was not included in the final bill.  Bankruptcy courts now can reduce or restructure mortgage obligations on vacation homes or yachts as part of a bankruptcy settlement; they cannot do the same for mortgages on primary residences.

The law also permanently raises from $100,000 to $250,000 per bank account the Federal Deposit Insurance Corporation (FDIC) insurance coverage enacted as a temporary provision last fall in the financial industry bailout law, PL 110-343.

Subscribe: