Washington - U.S. Senator Robert Menendez (D-NJ), a member of the Senate Banking Committee, today introduced legislation in the Senate that would defer foreclosure activity for up to nine months for certain responsible homeowners who are struggling with bad home loans. The Home Retention and Economic Stabilization Act would apply to homeowners making less than a certain income who are stuck in predatory subprime or Payment Option ARMs and would require them to continue to make mortgage payments and remain responsible during their deferment period.

"The tsunami of foreclosures is devastating our country, from the family that loses its home, to the neighborhood that sees property values decline, to our national economy," said Senator Menendez. "This legislation represents the type of helping hand for homeowners that the Bush administration just won't give. With eight million foreclosures expected over the next few years, we have to start getting to the root of the economic crisis by focusing on homeowner relief and support."

Menendez's bill is the companion to legislation introduced by Rep. Doris Matsui (D-CA) in the House of Representatives.

"A short-term delay in processing foreclosures will allow time for lenders and servicers to increase their capacities to meet current need, for credit markets to stabilize, and for legislative and government solutions to reach full capacity," said Rep. Matsui. "I look forward to working with Senator Menendez, and our colleagues, to provide struggling homeowners with immediate and responsible relief. Senator Menendez is an active Member on the Senate Banking Committee and will be a great advocate for this bill in the Senate."

Center for Responsible Lending president Michael Calhoun said: "A timeout on foreclosures is a necessary, common-sense stop-gap measure that will give lawmakers, regulators and homeowners some breathing space while everyone works to craft a fair, sensible and lasting solution to the foreclosure crisis at the heart of the economic meltdown."

Summary of the Home Retention and Economic Stabilization Act:

To qualify for the nine month deferment period, the homeowner must:

• Have an owner-occupied (Subprime or Payment Option Arm) mortgage. Investors are excluded.

• Earn 200% or below Area-Medium Income.

• Must have hit a interest rate reset; or 60 or more in default on a subprime mortgage or a payment option mortgage

If the homeowner qualifies, they must:

• Continue making market rate monthly payment

• Must stay in contact with their lenders or servicers during deferment period.

• Continue to maintain their property

If homeowner fails to do any of the above three requirements, they are out of the deferment period

If homeowner and lender or servicer reach an agreement on new, affordable mortgage terms then the deferment period ends for homeowner.

Foreclosure statistics:

National

• Foreclosure filings, default notices, auction sales notices, and back repossessions rose to 279,561 (increase of 5%) from September to October. (RealtyTrac)

• It is projected that that U.S. home foreclosures will reach 8.1 million in the four years, up from the previous forecast of 6.5 million (Credit Suisse)

New Jersey

• To date there are 56,285 New Jersey foreclosure properties. (RealtyTrac)

• There have been 4,030 new foreclosures as of November 2008. (RealtyTrac)

• In Essex County there are 1,158 foreclosure properties or 1 in every 266 housing unit.

• 9.2% of homeowners in New Jersey - were either in foreclosure or delinquent on their payments. (Mortgage Bankers Association)


Groups in support of Home Retention and Economic Stabilization Act:

The Center for Responsible Lending, AARP, National NeighborWorks Association, Consumer Federation of America, American Federation of Government Employees, AFL-CIO, AFSCME, American Federation of Teachers (AFT), IBEW, UAW, Communications Workers of America (CWA), National Education Association (NEA), SEIU, United Steelworkers, Brotherhood of Railroad Signalmen, Leadership Conference on Civil Rights, National Council of La Raza, NAACP, Black Leadership Forum, National Fair Housing Alliance, Jewish Labor Committee, Jewish Council for Public Affairs, Asian American Justice Center, Community Action Partnership, and National Rural Housing Coalition.

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