WASHINGTON, DC – Rep. Edolphus “Ed” Towns (NY-10) introduced today H.R. 3566, the Fairness in Foreclosure Act, a bill which will standardize the length of time after a foreclosure that a mortgage company can bring a deficiency judgment against a homeowner. The bill will also prohibit lenders from bringing a deficiency judgment against low-income borrowers.

“At a time when so many Americans are out of work due to the excesses of the financial industry, we must protect those who are unable to protect themselves. I am fully committed to offering relief to struggling homeowners across the country,” Rep. Towns stated.  “That is why I have introduced the Fairness in Foreclosure Act.  A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to homeowners after they have gone through the arduous foreclosure process.  Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely. “

In some states lenders have the option to pursue borrowers for deficiency judgments up to six years after the date of the foreclosure sale.  If a borrower is sued for a deficiency judgment for the amount that the bank does not recover after a foreclosure sale, then they may have to pay tens of thousands of dollars years later for their one financial hardship. H.R. 3566, if enacted, would provide a fair and balanced process, while bringing relief to homeowners as they struggle to get back on their feet again post-foreclosure.