Foreclosures in the country have worsened over the past two years. More and more people are losing their homes and winding up in shelters, cars, and even the streets.

The total number of foreclosures has gone up since June of 2006 where 88,195 homes were foreclosed in the United States. Numbers almost doubled during the same period in the following year with 164,644 in 2007, and increased significantly in 2008 with 252,363.

For weeks now, both Senate and Congress have been working out the passage of a comprehensive bill that would provide solutions to the housing foreclosure epidemic and help homeowners keep their homes. On July 18 Friday, the Senate cleared the Foreclosure Prevention Act of 2008 by an 84-12 vote.

The bill is designed to modernize the Federal Housing Administration (FHA) and provide housing reforms. One of the more important provisions in the bill is the appointment of a regulator for mortgage giants Fannie Mae and Freddie Mac. It would also grant state and local governments funding of up to $4 billion to restore foreclosed and abandoned homes.

In addition, the Act will create a temporary FHA program to allow homeowners at risk of foreclosure to refinance with the participation of their lenders.

Other provisions in the Foreclosure Prevention Act include:

          •    Increase in FHA loan limits
          •    Lessened down payment requirement at 3.5 percent
          •    Up to $8,000 refundable tax credit for first-time homebuyers
          •    A shield for homebuyers against mortgage fraud  through a fortified “Truth in Lending Act” (TILA), where change in payments based on rate adjustments has to be disclosed to borrowers
          •    Protection for soldiers against foreclosure
          •    More than $10 billion to fund loans for first-time homebuyers and construction of inexpensive  rental housing
          •    An additional $150 million for foreclosure prevention counseling

Mortgage Bankers Association (MBA) chairman Kieran P. Quinn expressed his gratitude in the Senate passing of the bill through a statement:

“I want to thank them, as well as the Senate leaders, for their hard work in getting this bill passed. This bill, if it becomes law, has the potential to be the most important piece of housing legislation in more than a decade,” he said.

The two chambers are now moving on to the next phase where they will settle differences in the bill through a House-Senate conference committee.