The causes and effects of the economic downturn are felt deeply in Nevada. Throughout my time in Congress, I have worked hard to confront this issue by providing tens of millions of dollars in resources to Nevada housing counselors and neighborhood stabilization programs, through tax relief for homeowners that receive a principal reduction, and by establishing a number of federal foreclosure-prevention programs. These efforts have certainly helped, but I remain committed to continue helping Nevadans stay in their homes.

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Wall Street Reform

I am proud to have led the fight to pass a landmark Wall Street reform bill to curb abuses that led to our nation’s recent economic crisis. Despite months of Republican opposition, I stood on the side of Main Street and fought to put consumers first, rein in reckless gambling that led to the worst financial crisis in a generation, and end taxpayer funded bailouts of banks that had become too big to fail. The Dodd-Frank Wall Street Reform and Consumer Protection Act ended the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy and eliminated loopholes that allowed unscrupulous mortgage lenders to pedal loans that confused and misinformed borrowers and contributed to Nevada’s housing crisis. The bill created the Consumer Financial Protection Bureau (CFPB), an independent watchdog housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.

Home Affordable Refinance Program (HARP)

On February 18, 2009, President Obama announced the Making Home Affordable (MHA) program, aimed at helping homeowners who are having difficulty making their mortgage payments avoid foreclosure. The MHA allows qualified homeowners to refinance or modify mortgages owned or guaranteed by Fannie Mae or Freddie Mac under the Home Affordable Refinance Program (HARP). HARP allows homeowners with mortgages to refinance into loans with more favorable terms even if they owe more than the value of their homes. While some Nevadans have taken advantage of this program, too many found themselves ineligible. I fought to make the program more responsive to Nevada’s needs. In October 2011, President Obama traveled to Las Vegas to announce changes to the HARP program, which included:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers.
  • Lifting the cap of 125 percent loan-to-value for eligible borrowers refinancing into fixed rate loans.
  • Eliminating the need for a new property appraisal for eligible borrowers.
  • Extending the program through December 31, 2015.

Please visit the Making Home Affordable website for more information and to see if you are eligible for the modified Home Affordable Refinance Program.

Mortgage Forgiveness Debt Relief Act

The Mortgage Forgiveness Debt Relief Act, which was signed into law in 2007, provides tax relief for the discharge of debt associated with a person’s principal residence. This tax relief was initially enacted for two years and offers relief to homeowners who would otherwise have owed taxes on forgiven debt. This change generally allows taxpayers to exclude income from the discharge of debt on their principle residence. Without this change, debt reduced through mortgage restructuring and debt forgiven after a foreclosure or short sale would be treated as income and be subject to income tax. The Mortgage Forgiveness Debt Relief Act, extended by the Emergency Economic Stabilization Act of 2008 and the American Taxpayer Relief of 2012, creates a temporary exception for debt forgiveness discharged between January 1, 2007 and December 31, 2013. I am proud to have supported all of these bills.

The American Taxpayer Relief Act of 2012 provided broad relief to the middle class taxpayers. During the final weeks of the 112th Congress, leaders in both parties worked together to avoid the so-called “fiscal cliff” of drastic spending cuts and tax hikes. The negotiations were long and difficult, but in the end, the compromise provided certainty to taxpayers and businesses. The American Taxpayer Relief Act of 2012, which President Obama signed into law on January 2, 2013, prevented tax increases on 98 percent of Americans and 97 percent of small businesses by permanently extending the middle-class tax rates that were due to increase in January 2013.

Neighborhood Stabilization Program

I was pleased to support the establishment of the Neighborhood Stabilization Program (NSP) in the Housing and Economic Recovery Act of 2008. This program was designed to help stabilize communities blighted by foreclosures and abandonment. I also helped revise key elements of NSP to make sure funds went to communities that are hardest-hit by the housing crisis and to expand the pool of eligible recipients. This effort resulted in a commitment of up to $1.3 million in emergency technical assistance to Las Vegas and Clark County in order to ensure the effectiveness of their neighborhood stabilization programs. I also worked with U.S. Housing and Urban Development Secretary Shaun Donovan to get additional Neighborhood Stabilization funds redirected to Nevada, resulting in a commitment of an additional $60 million in resources. Nevada received a total of over $160 million from the program.

Helping Families Save Their Homes Act

Senator Reid at the White House for President Obama’s signing into law of the Helping Families Save Their Homes Act on May 20, 2009

I worked to lead passage of the Helping Families Save Their Homes Act, which includes several provisions to prevent foreclosures, protect tenants, and combat mortgage scams. This law:

  • Protects loan servicers from lawsuits, many of whom will not modify mortgages fearing they will be sued by investors.
  • Expanded the HOPE for Homeowners (H4H) program by lowering fees for homeowners and lenders alike, and giving lenders greater incentives to participate. This program helps modify loans with the goal of lowering monthly mortgage payments.
  • Provided resources to the U.S. Department of Housing and Urban Development (HUD) to combat mortgage fraud, including additional staff and advertising to warn consumers about scams and inform them of legitimate foreclosure-relief services.
  • Provided resources to HUD to advertise in languages that will raise awareness more broadly in communities across the nation. This will help prevent fraud and provide homeowners with information on how and where to get government-approved assistance.
  • Included revised legal protections for tenants of foreclosed homes.

Fraud Enforcement and Recovery Act

Mortgage fraud remains an ongoing problem. Unfortunately, as the federal government increased efforts to help families losing their homes, the prevalence of fraud rose simultaneously. There are many companies claiming to be government-approved and charging for services that should be free. Further, these companies are also continuing to offer consumers extremely risky loans or tricking them out of their homes. According to the Federal Bureau of Investigation (FBI), in 2001, 6,400 cases of fraud were reported across the country. In 2010, the number of fraud cases had increased more than tenfold to 70,533 cases [FBI]. To resolve this problem, I helped lead the Senate in passing the Fraud Enforcement and Recovery Act of 2009, which President Obama signed into law. This law:

  • Provides critical funding and new tools that will allow law enforcement agencies, such as the FBI and HUD, to prosecute and punish those responsible for the mortgage fraud and corporate schemes that have hurt countless hardworking Americans and led to the worst financial crisis in decades.
  • Increases resources to allow the U.S. Department of Justice to take fraud cases to trial.
  • Applies federal regulations to all companies that sell mortgages. Previously, the federal government could only regulate banks.
  • Closes several legal loopholes that otherwise may allow individuals guilty of criminal conduct to evade prosecution. Individuals who have engaged in corruption or deliberate criminal behavior should not be able to escape punishment on a technicality.
  • Provides the Federal Trade Commission (FTC) funding to investigate subprime loans. For example, a FTC investigation resulted in charges against a California company that allegedly charged Hispanic and African-American clients higher interest rates than white clients, even though they had the same qualifications [FTC].

If you think you are a victim of mortgage fraud, please contact the Nevada Attorney General’s Bureau of Consumer Protection at in Las Vegas (702) 486-3194 or (775) 684-1180 in Carson City. A complaint form, as well as other valuable information on consumer protection, is also available on the Attorney General’s website.

National Mortgage Settlement

In February 2012, the Obama Administration, along with Attorneys General from 49 states around the nation, including Nevada’s Attorney General Catherine Cortez Masto, announced a national settlement with the five largest mortgage services to acknowledge their role in the housing crisis and make a greater effort to help homeowners. This settlement includes $25 billion in mortgage modification incentives, including principal reduction, for struggling homeowners in need of immediate loan modifications. Additionally, the President announced several new programs to incentivize investment in the housing market, providing much needed relief to the Nevada market. Taken together, these efforts are making it easier for homeowners to refinance into the historically low interest rates we see today. While the January 13, 2012, deadline to submit a claim form has passed, the settlement administrator may still be able to process properly filled out claim forms that are received or submitted online in the next few weeks. For more information, please visit the National Mortgage Settlement website or call them at 1-866-430-8358.

Housing Finance Agencies Innovation Fund for the Hardest Hit Markets (Hardest Hit Fund)

In response to my calls for more aggressive foreclosure prevention programs, the Obama Administration created the Housing Finance Agencies Innovation Fund for the Hardest Hit Markets. Nevada was awarded nearly $200 million to develop programs that help unemployed and underemployed homeowners with financial assistance, mortgage principal reduction, speeding up short sales, and providing second mortgage relief. The Nevada Affordable Housing Assistance Corporation (NAHAC) is currently operating several programs funded through Nevada’s Hardest Hit Fund Program. Please visit their website for details on what assistance may be available to you. Additionally, I have a team of staff in my Nevada offices committed to helping distressed homeowners better understand what programs are available to them. Please visit my Casework webpage for more information on how my office can be of assistance. For more information on foreclosure prevention and keeping your home affordable, please visit my Homeowner’s Assistance webpage.