Hope for homeowners needs to be modified

By Kayleigh Harvey – Talk Radio News Service

The House Financial Services Committee met today for the first time under the one hundred and eleventh Congress to discuss “Promoting Bank Liquidity and Lending Through Deposit Insurance, Hope for Homeowners, and other Enhancements”. 

Testifying before the committee members were John Bovenzi from the Federal Deposit Insurance Corporation and Meg Burns from the Federal Housing Administration. 

Committee Chairman Barney Frank (D-MA), opened the meeting saying, “Hope for homeowners came out of this committee and we passed it last year, we didn’t do it well. I acknowledge that, and it has to be corrected.”

The discussion focused on proposals to modify the current ‘Hope for Homeowners’ Program.

John Bovenzi in his testimony to the committee said that, “Liquidity is a key component in returning the economy to a condition where it can support normal economic activity and future economic growth”

“Deposits, especially FDIC ensured deposits are a key source of bank liquidity. The FDIC has implemented the temporary liquidity guarantee program to help stabilize the funding structure of financial institutions and expand their funding base to support the extension of new credit”, he stated. The FDIC is trying to increase their line of credit to potential home buyers from $30 billion to $100 billion. 

Congresswoman Judy Biggert (R-IL) said: “From home builders we’re hearing that they have homes and condos to sell, people arrive, but because of the severe restrictions that have been put on the loan, make it so that the buyers walk-away”.

Meg Burns said: “All of us at HUD welcome and applaud your decision to make modifications to the ‘Hope for Homeowners’ program. As you are well aware the initial program data clearly indicate that changes are not only appropriate but necessary. Furthermore, changes are needed as quickly as possible. To date FHA has ensured no loans under the program, lenders have taken 451 applications and 25 loans have closed”.

February 3, 2009