The Helping Families Save Their Homes Act of 2009 () is an enacted
public law
Public law is the part of law that governs relations between legal persons and a government, between different institutions within a state, between different branches of governments, as well as relationships between persons that are of direct ...
in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
. On May 20, 2009, the Senate bill was signed into law by President
Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
. The stated purpose of the act, a product of the
111th United States Congress
The 111th United States Congress was a meeting of the legislative branch of the United States federal government from January 3, 2009, until January 3, 2011. It began during the last weeks of the George W. Bush administration, with th ...
, was to allow
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
judges to modify
mortgages
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pu ...
on primary residences, among other purposes; however, that provision was dropped in the Senate and is not included in the version that was eventually signed into law. In addition, the bill amends the Hope for Homeowners Program as well as provide additional provisions to help borrowers avoid foreclosure.
On May 20, 2009, President Obama signed the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act into law (), reauthorizing
HUD
Hud or HUD may refer to:
Entertainment
* ''Hud'' (1963 film), a 1963 film starring Paul Newman
* ''Hud'' (1986 film), a 1986 Norwegian film
* ''HUD'' (TV program), or ''Heads Up Daily'', a Canadian e-sports television program
Places
* Hud, Fa ...
's Homeless Assistance programs. It was included as part of the Helping Families Save Their Homes Act of 2009. The HEARTH Act allows for the prevention of homelessness, rapid re-housing, consolidation of housing programs, and new homeless categories. In the eighteen months after the bill's signing, HUD must make regulations implementing this new McKinney program.
In late 2009, some homeless advocacy organizations, such as the
National Coalition for the Homeless
National may refer to:
Common uses
* Nation or country
** Nationality – a ''national'' is a person who is subject to a nation, regardless of whether the person has full rights as a citizen
Places in the United States
* National, Maryland, c ...
, reported and published perceived problems with the HEARTH Act of 2009 as a HUD McKinney-Vento Reauthorization bill, especially with regard to privacy, definitional ineligibility, community roles, and restrictions on eligible activities.
Legislative history
In the wake of the bursting of the
United States housing bubble
The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reac ...
and the
collapse
Collapse or its variants may refer to:
Concepts
* Collapse (structural)
* Collapse (topology), a mathematical concept
* Collapsing manifold
* Collapse, the action of collapsing or telescoping objects
* Collapsing user interface elements
** ...
of the American
subprime mortgage
In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) is the provision of loans to people in the United States who may have difficulty maintaining the repayment schedule. Historically, subpri ...
industry, this bill was introduced by
Rep. John Conyers
John James Conyers Jr. (May 16, 1929October 27, 2019) was an American politician of the Democratic Party who served as a U.S. representative from Michigan from 1965 to 2017. The districts he represented always included part of western Detroit. ...
(
D-
Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...
) on February 23, 2009. It was then referred to the
House Financial Services Committee
The United States House Committee on Financial Services, also referred to as the House Banking Committee and previously known as the Committee on Banking and Currency, is the committee of the United States House of Representatives that oversees t ...
, the
House Judiciary Committee
The U.S. House Committee on the Judiciary, also called the House Judiciary Committee, is a standing committee of the United States House of Representatives. It is charged with overseeing the administration of justice within the federal courts, a ...
, and the
House Veterans' Affairs Committee
The standing committee, standing Committee on Veterans' Affairs in the United States House of Representatives oversees agencies, reviews current legislation, and recommends new Act of Congress, bills or amendments concerning U.S. military veteran ...
.
However, on February 25, the House passed a resolution, 224–198, which permitted the
Speaker of the House
The speaker of a deliberative assembly, especially a legislative body, is its presiding officer, or the chair. The title was first used in 1377 in England.
Usage
The title was first recorded in 1377 to describe the role of Thomas de Hungerf ...
to declare the House resolved into the
Committee of the Whole House
A committee of the whole is a meeting of a legislative or deliberative assembly using procedural rules that are based on those of a committee, except that in this case the committee includes all members of the assembly. As with other (standing) c ...
for exclusive consideration of the Helping Families Save Their Homes Act, waiving most points of order against consideration of the bill and all points of order against provisions of the bill.
[H.R.1106: All Legislative Actions](_blank)
, Congressional Record, Library of Congress
On February 26, the House considered the bill under the provisions of the resolution passed the previous day, which provided for one hour of general debate. With Rep.
José Serrano (D-
New York
New York most commonly refers to:
* New York City, the most populous city in the United States, located in the state of New York
* New York (state), a state in the northeastern United States
New York may also refer to:
Film and television
* '' ...
) designated as chairman of the committee, the House debated the bill for one hour and then left it as unfinished business.
On March 5, the House voted to pass the bill, 234–191, with most Democrats supporting the bill and most Republicans opposing it.
The engrossed House legislation was referred to the
Senate Committee on Banking, Housing and Urban Affairs on March 11, 2009. Similar legislation, and were both introduced on April 27, 2009, since then. On May 6, the Senate passed S.896 on a vote of 91–5. The key difference between H.R.1106 and S.896 is that the latter does not include a controversial
cram down
A cram down or cramdown is the involuntary imposition by a court of a reorganization plan over the objection of some classes of creditors.
Home mortgage loans
While typically used in a corporate context, the phrase has gained popularity in the co ...
provision, which failed to garner majority support in the Senate. On May 19, the House approved an amended version of S. 896 by a 367–54 vote, with one member voting "present". The Senate promptly approved the House's amendment, and President Obama signed the bill into law the next day.
Provisions
The Helping Families Save Their Homes Act will:
*Expand eligibility for
Chapter 13 bankruptcy
Title 11 of the United States Code sets forth the statutes governing the various types of relief for bankruptcy in the United States. Chapter 13 of the United States Bankruptcy Code provides an individual with the opportunity to propose a plan o ...
by excluding home mortgage debt from the current maximum debt limitations.
*Authorize the
Secretary of Housing and Urban Development
The United States secretary of housing and urban development (or HUD secretary) is the head of the United States Department of Housing and Urban Development, a member of the president's Cabinet, and thirteenth in the presidential line of succe ...
to pay out all or some of the balance owed on any
Federal Housing Administration
The Federal Housing Administration (FHA), also known as the Office of Housing within the Department of Housing and Urban Development (HUD), is a United States government agency founded by President Franklin Delano Roosevelt, created in part ...
-insured loans that are modified under the legislation.
*Expand the
HOPE for Homeowners
The United States Housing and Economic Recovery Act of 2008 () (commonly referred to as HERA) was designed primarily to address the subprime mortgage crisis. It authorized the Federal Housing Administration to guarantee up to $300 billion in new ...
program
*Provide a legal safe harbor from liability for lenders that enter into loan modifications or workouts with borrowers. (Under current law, lenders that have packaged and sold one or more mortgages to investors as securities may be held liable for losses suffered by the investor as a result of the loan modification.)
*Extend increased
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...
(FDIC) and
National Credit Union Administration
The National Credit Union Administration (NCUA) is a government-backed insurer of credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the Federa ...
(NCUA) deposit insurance limits until December 31, 2013. (The
Emergency Economic Stabilization Act
The Emergency Economic Stabilization Act of 2008, often called the "bank bailout of 2008", was proposed by Treasury Secretary Henry Paulson, passed by the 110th United States Congress, and signed into law by President George W. Bush. It beca ...
temporarily increased the FDIC and NCUA limits from $100,000 to $250,000 in 2008, but those increases were scheduled to expire on December 31, 2009.)
Cram down
H.R. 1106 contains a provision, frequently called "
cram down
A cram down or cramdown is the involuntary imposition by a court of a reorganization plan over the objection of some classes of creditors.
Home mortgage loans
While typically used in a corporate context, the phrase has gained popularity in the co ...
," which would allow judges to modify the rights of a mortgage holder, whether that mortgage holder is a primary lender or an investor in a
mortgage-backed security
A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...
, with regard to delinquent mortgages on primary residences if the borrower has entered Chapter 13 bankruptcy proceedings. Among other modifications, the bill would allow bankruptcy judges to reduce the principal amount contractually owed by the borrower under the original mortgage. Proponents of cram down, chiefly Democrats, have cited studies saying that the provision could have helped 20% of homeowners facing
foreclosure
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Formally, a mortg ...
s stay in their homes.
This provision drew extensive criticism because it would have allowed borrowers to abdicate their contractual obligation to repay the full amount of their loan. Many argued that cram down would have made it more costly for other individuals to purchase a home because lenders would have had to increase interest rates and down payments to supplement the loss from the loan modification. Opposition to cram down stalled H.R. 1106 and led to the introduction of S.896, which does not include cram down, in its place.
See also
*
Homelessness in the United States
Homelessness in the United States refers to the issue of homelessness in the United States, a condition wherein people lack a fixed, regular, and adequate residence. The number of homeless people varies from different federal government accou ...
*
McKinney–Vento Homeless Assistance Act
The McKinney–Vento Homeless Assistance Act of 1987 is a United States federal law that provides federal money for homeless shelter programs.National Coalition for the Homeless"Fact sheet on The Stewart B. McKinney Homeless Assistance Act" Jun ...
References
{{US housing by state
United States federal housing legislation
United States federal banking legislation
Acts of the 111th United States Congress
United States federal legislation articles without infoboxes
Subprime mortgage crisis
Homelessness in the United States
Mortgage legislation