Banking Committee Chair Dodd Considers Bill to Help Homeowners Avoid Foreclosure

The Senate Banking Committee, chaired by Christopher Dodd, is preparing a financial regulatory reform legislation to be released by April 2009, the deadline requested by President Barack Obama.

Already, Dodd plans to schedule hearings for several months where he expects to review the $700 billion financial bailout program and the modernization of financial markets.

Furthermore, he plans to review a measure that could be incorporated in the $825 billion economic stimulus package which would use government money to modify loan mortgages for struggling homeowners and prevent foreclosures.

He expects an attachment of a condition in the economic stimulus program that would suspend mortgage foreclosures for a maximum of 90 days.

Meanwhile, legislators are expected to propose a bill that would give authority to bankruptcy judges to alter mortgages to reduce the number of foreclosed homes.

According to Dodd, an agreement between Citigroup Inc. and some senators was a good starting point for tackling a policy that would give authority to bankruptcy judges to alter loan mortgages to help struggling homeowners avoid foreclosures.

The agreement also gives bankruptcy judges the power to modify mortgages made before the passing of the bill.

Dodd said that Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., and the Obama Administration are in talks about a foreclosure prevention measure.

In 2008, Bair proposed a bill that requires the use of about $24.4 billion financial bailout funds to alter mortgages of homeowners of distressed properties. Bair expects that her proposal could prevent about 1.5 million homes from being foreclosed.

According to Dodd, the Obama Administration is receptive to Bair’s mortgage modification proposal.
Meanwhile, the banking committee plans to invite Treasury Secretary Timothy Geithner to testify about various ways to implement financial reforms.

Dodd also scheduled Federal Reserve Chairman Ben Bernanke to testify before the banking committee for the financial reform package.

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