The Helping Families Save their Homes Act passed the House and Senate as of yesterday. It is now passed on to the president to sign. The new program will encourage banks to not foreclose on borrowers that are falling behind on their payments. They are encouraging them to work out a payment plan or modify the loan with the borrower. The House voted 367 to 54 in favor of the program and the Senate voted 91 to 5 in favor.

There will be an additional $300 billion to encourage lenders to modify mortgages of those that are struggling to pay. The homeowner will need to agree to pay for a premium insurance plan that will help lower interest rates only on a 30-year fixed-rate loan backed by FHA. Therefore, there are fewer loans that are helped through this program and again insurance companies will have more power over the public.

Bankruptcy judges will not be able to reduce mortgage payments as previously proposed. Too many representatives in the congress didn’t like the idea and voted against it. The program will also eliminate those that are proven to have fallen behind on their payments intentionally from receiving any kind of help. The government hopes to help at least 400,00 homeowners, but in reality this new program may not help many at all and will in fact offer more control to the lender and the insurance companies.