Dear NACBA Member:
On Wednesday, we wrote to bring you up-to-date on activities of NACBA’s Legislative Committee in support of the Principal Paydown Plan (PPP). Just as that email went out, we learned that the PPP figured prominently in a “call to action on housing” sent to President Obama by 32 members of the California delegation in the U.S. House of Representatives. The letter to President Obama reads in relevant part:
“One promising possibility would be a temporary reduction in the interest rates of certain homeowners who file for Chapter 13 bankruptcy, so that the entirety of their monthly payments would go to paying down their principal balances for five years. Coordination with the bankruptcy process would make these reductions more likely to succeed than other types of loan modifications, while also limiting the program to those who truly need it and avoiding the administrative failures that have plagued many other initiatives. Such a plan could be implemented for mortgages held by Fannie Mae and Freddie Mac, as we believe that such a plan would be entirely consistent with FHFA’s obligation to minimize taxpayer losses in the Enterprises. This plan could also be implemented as part of the nationwide settlement currently being negotiated by a group of state attorneys general.”
The endorsement by the California delegation of the PPP signals a growing recognition among policymakers that Chapter 13 bankruptcy is an appropriate forum for addressing the foreclosure crisis. On Thursday, the Democrats on two House Committees -- Judiciary and Oversight and Government Reform – included mortgage modifications in bankruptcy court (such as the PPP) as an approach to fixing the housing market and the broader economy in their suggestions submitted to Congress’ deficit reduction committee. And, in correspondence last month with Members of Congress, Edward DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), said NACBA’s PPP has “some attractive features” and indicated that he has instructed his legal staff to study it further.
A number of NACBA members have taken the time to meet with their lawmakers in recent weeks and months, either in Washington, at home, or both, impressing upon them the harsh realities our clients face when it comes to dealing with mortgage servicers in the hope of saving their home from foreclosure. A growing number of lawmakers have agreed to lend support to the PPP and to be helpful in any way they can to see it implemented.
If you have not already joined in this outreach effort, we encourage you to do so. While our team in Washington does a terrific job representing us before lawmakers and staff, there is no substitute for hometown constituents providing the local perspective on these issues. The relationship you will build with your lawmakers will go well beyond the current foreclosure crisis and be of tremendous help as we tackle other issues, such as student loans and fraudulent mortgage claims. At the local level, our issues become personal and we have an opportunity to illustrate the impact of policy decisions on everyday people. Angie and Zach, working with our legislative team in DC, are poised to help you set up a meeting and support you throughout the process. Please contact Angie Thies-Huber, NACBA’s Field Director at (614) 929-5375 and Zach Manifold, NACBA’s Field Coordinator at (614) 317-7180.
Thank you for your support of NACBA!
NACBA Legislative Committee Chair
P.S. More information about the Principal Paydown Plan is available here.