Heck bill offers ‘second chance’ to foreclosed homeowners

WASHINGTON — People who have lost their homes in foreclosure could be given another chance to buy a house under a bill introduced Thursday in Congress.

Legislation by Rep. Joe Heck, R-Nev., creates a federal program that would insure fresh loans to foreclosed owners, even after their credit scores have taken big hits.

Applicants would need to meet a series of requirements to obtain a new 30-year fixed rate mortgage insured by the Federal Housing Administration, including having made rent payments on time over the past 12 months.

“A lot of people have been foreclosed or short-saled so now they have this negative mark on their credit,” said Heck, who represents one of the congressional districts hardest hit by the mortgage crisis. “But now they are in a position because housing prices have dropped that they could actually buy a home and afford it, but they can’t get a loan because of the foreclosure or short sale on their record.”

The new legislation will be among the topics discussed when the House Financial Services Committee convenes a field hearing on foreclosures next Thursday at the Clark County Commission chambers.

Representatives of the Nevada state foreclosure mediation program, the Nevada Association of Mortgage Professionals, the Nevada Association of Realtors and the Nevada Credit Union League are set to testify at the hearing, which starts at 9:30 a.m.

Heck said the bill emerged from discussions among Realtors, mortgage brokers and others in Southern Nevada. “We were trying to look at ways to get people back into homes by giving them a second chance at home ownership,” he said.

The Nevada Association of Realtors issued an endorsement through President Blane Johnson.

“We support any effort to help responsible homeowners realize the dream of owning their own home,” Johnson said.

Democrat John Oceguera, the Nevada Assembly speaker who is challenging Heck in November’s election, said he was not impressed.

Oceguera said the bill was “too little, too late.”

“After witnessing 61 straight months of Nevadans suffering from the highest foreclosure rates in the country … Joe Heck woke up to the fact that it is an election year and introduced legislation addressing a critical issue Nevadans are facing,” Oceguera said. “He’s just playing politics.”

Heck contended the promise of federal insurance will provide an incentive for banks to participate. “The banks and especially the small community banks, they are eager to loan,” he said.

The bill authorizes an insurance fund capped at $200 billion. Depending on the size of loans accepted for banking, Heck said it could cover more than 1 million new owners.

People with a net worth of more than $1 million would not qualify. Also not eligible are people who abandoned a home to a strategic default in the past 10 years.

It also contains further protections, he said, such as requiring new mortgage payments not to exceed the amount the owner has paid in rent over the past year.

Heck’s bill joins several measures that have been submitted to Congress as possible solutions to ease the mortgage crisis.

Sen. Dean Heller, R-Nev., last month introduced a bill that would allow people to remain in their homes as renters after being foreclosed upon, with the possibility of resuming ownership after five years.

With Nevada’s home foreclosure rate highest in the nation, the issue will play a big role in 2012 elections.

Oceguera said Thursday he would focus his campaign on jobs, the economy, education and the home foreclosure crisis that has devastated Southern Nevada. He noted that nearly seven out of 10 Clark County homeowners are underwater in their mortgages, including himself.

“I think we’ve got a lot of work to do there,” Oceguera said in an interview. “We’ve got to do something still for the people in the middle. The middle class are the ones who are suffering.”

Oceguera on Thursday filed to run in the 3rd Congressional District, which Heck represents. Oceguera will have some primary competition but is backed by the state and national Democratic parties as the chosen candidate to take on Heck in the fall general election.

Former U.S. Rep. Dina Titus, the Democrat who lost to Heck in 2010, also filed paperwork Thursday to run for Congress. This time she is seeking the 1st Congressional District seat held by U.S. Rep. Shelley Berkley, a Democrat who is running for U.S. Senate against Heller.

In Congress, Titus supported the Obama administration programs aimed at helping people stay in their homes or renegotiate their mortgages at lower interest rates. She said more needs to be done to reduce the principal Nevadans owe on homes that have lost value, in many cases more than half.

Las Vegas Review-Journal reporter Laura Myers contributed to this story. Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760. Follow him on Twitter @STetreaultDC.