Bill Would Create Emergency Federal Refinancing Program

Washington, DC – Today, Congressman Joe Baca (D-Rialto) reintroduced legislation that creates a new entity within the federal government, responsible for financing loans to families currently in foreclosure or serious default.  The Family Foreclosure Rescue Corporation (FFRC) Act reinstitutes a Depression era concept to provide emergency refinance assistance to families who can no longer afford their mortgage payments, and was originally introduced by Congressman Baca in the 110th Congress in November, 2007.  

“With no end in sight to the current wave of foreclosures, families in the Inland Empire and across the nation need help,” said Rep. Baca.  “I am proud to introduce the Family Foreclosure Rescue Corporation Act, which I believe can be a part of the solution.  My legislation can reverse the trend in foreclosures and keep families in homes by providing immediate assistance to those who are in serious default of a mortgage loan.”

The Family Foreclosure Rescue Corporation Act reintroduces a concept instituted by President Franklin Roosevelt during the Great Depression.  President Roosevelt established the Home Owner’s Loan Corporation to provide emergency refinance assistance to families who could no longer make their mortgage payments.  Now, in the midst of a new financial crisis, when many mortgage payments have ballooned past affordable levels, the FFRC will function under the same principles and allow families to refinance their mortgage through a government administered loan with a set interest rate. 

“Too many American families have fallen victim to the predatory lending practices that dominated much of the home mortgage market,” commented Rep. Baca.  “We must do everything in our power to keep our children’s futures safe and financially secure.  My bill gives borrowers an alternative to unaffordable balloon payments, keeping more families in their homes.”  

In addition the legislation establishes that: 

• The FFRC will serve as a temporary entity that only accepts loan applications for three years.  After the initial three years, the FFRC will function only to finish the administration of loans in the program; 
• The FFRC will be run under the direction of a seven member board composed of appointees from the President, the Speaker of the House, and the Majority Leader of the Senate; and,
• In order to cover costs involved with the FFRC, the government will sell treasury bonds. 

“Throughout our nation’s history, America has always cared for her own in times of hardship,” concluded Rep. Baca. “The current financial crisis should be no different.  By providing mortgage assistance, the Family Foreclosure Rescue Corporation can bring economic stability back to our communities and neighborhoods and prevent more families from becoming homeless.”