Jack Reed: “today I am reintroducing the Preserving Homes and Communities Act with Senators Brown, Wyden, Smith, and Merkley. This…”

“today I am reintroducing the Preserving Homes and Communities Act with Senators Brown, Wyden, Smith, and Merkley. This legislation would reform Federal Housing Administration, FHA, Fannie Mae, and Freddie Mac note sale programs to protect homeowners from foreclosure and keep properties in the hands of families and local civic institutions. FHA, Fannie Mae, and Freddie Mac began selling nonperforming and reperforming loans after the great recession to strengthen their balance sheets. These transactions, known as note sales, transfer mortgage ownership to bulk purchasers, including private equity firms and institutional investors. The sale of nonperforming and reperforming loans may reduce financial risk for FHA, Fannie Mae, and Freddie Mac and help purchasers turn a profit, but they often directly harm homeowners by taking homes from families and moving properties into the single-family rental market. Loans insured by FHA or securitized by Fannie Mae or Freddie Mac have strong foreclosure protections for borrowers. Companies that service these mortgages must offer specific loss mitigation options to eligible borrowers before they can begin foreclosure proceedings, which helps many borrowers avoid foreclosure and catch up on their payments. But while these foreclosure protections are effective, they are drastically reduced when a mortgage is included in a note sale.…”