Agreeing with Neil D, this is a good idea for a thread.

A quick look for the "homeowners help" bill passed yesterday by the US House finds only the original bill "as introduced" but I haven't yet found the version that was passed. The "introduced" form is very difficult reading since it's in the form of "in paragraph 9324 of Section 922.a.i.(b) of FR392 delete "as" and replace with "for" and delete ";" at the end of the line."

In order to know exactly what it does, it would be necessary to get the origina/current versions of some dozen separate regulations and "mark up" the changes. In order to tell whether each individual change applies to a particular kind of mortgage, one would have to know what kind of mortgage is regulated by each of the existing "parent laws" whre the changes are made.

Apparent applicability is limited to only loans originated under a previously existing Federal program such as FHA. The bill does give the VA permission to publish regulations to make the provisions of the bill applicable to VA loans, but does not require that such regulations be published. I suspect other "enablements without mandates" for other kinds of mortgages.

For some kinds of mortgages (and I can't tell at this point for which kinds) the bill allows/requires a mortgage servicer to modify the mortgage, with protection from claims by the actual "owner/holder" of the mortgage. This could be a very important aid, since the bundling of individual mortgages into trade packages has made it almost impossible for some to even find out who the "owner" is, and the actual owner may have waived the right to make changes when that mortgage joined a "package."

It seems to be clear that before being eligible for any of the "reliefs" in the bill, a homeowner must be able to prove that the servicer has been asked to provide relief prior to any request under the bill. It also seems to be clear that in order to receive any help, one must file bankruptcy, so the bill (apparently?) does nothing for anyone who wants to try to work out a better plan to avoid bankruptcy.

The bill allows a bankruptcy court to order a change in the "face value" of the mortgage, and to order a "refinancing" of the changed amount for up to 40 years; but the press has ignored that the 40 years is from the original date of the original mortgage, so someone with a 30 year mortgage, 20 years old, could - at best - refinance to a new 20 year mortgage.

And if the house is sold within any time up to three years, a percentage of the amount by which the mortgage face value was reduced becomes due to the Fed. (80% after one year, 60% after two, etc.) This may have the effect of locking anyone using the provisions of the act into remaining in the home. (This may preclude any relief for persons wanting to get out of an untenable mortgage and into an "honest" one in order to sell so that they can "downsize" to something more affordable.)

A prelimminary look only, and it's unlikely to pass in the Senate without substantial changes.

John