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Washington, D.C.— With millions of Americans teetering on the financial edge, Congressman Brian Baird (D-WA-03) has joined with a bipartisan Congressional majority to provide some much needed cover to families all across the country, many of whom are just a missed payment away from disaster. The American Housing Rescue and Foreclosure Prevention Act (H.R. 3221) will direct billions of dollars to help honest folks refinance their mortgages, and provide a much needed backstop for lending giants Fannie Mae, and Freddie Mac. President Bush dropped his threat of a veto, and instead says he will sign the legislation. It is expected to reach his desk as soon as tonight, and should be law by the end of the week.
“Buying a home is supposed to be part of the American Dream, but families all across Southwest Washington are seeing that dream become a nightmare,” said Congressman Baird. “Too many honest folks find themselves upside down in a loan with an interest rate that just went through the roof. This bill will allow those people to refinance into a lower cost, government backed fixed rate loan. It will allow them to keep a roof over their head, and won’t leave the American taxpayer holding the bag.”
In order to be eligible to refinance with the Federal Housing Administration (FHA) lenders and mortgage investors who own the note on the house must first agree to write down the principal of the loan. For their part, homeowners would agree to share a significant portion of any future profit made selling the home with the government. Only primary residences are eligible. Investment properties and second homes can not be refinanced. According to the Congressional Budget Office (CBO) this can all be accomplished with no additional cost to the American Taxpayer.
“This is really a win-win for both lenders and homeowners,” said Congressman Baird. “While losing money is never in anyone’s business plan, this gives lenders the chance to recoup most of the money they lent out, and allows homeowners their chance to hold on to, and eventually pay off, their piece of the American Dream.”
H.R. 3221 will also help backstop Fannie Mae and Freddie Mac, who own or guarantee anywhere from 50-70 percent of all U.S. mortgages. Without access to this government line of credit, both agencies would be forced to slow their purchasing power, which could in turn send the already anemic housing market into a further tailspin. Both agencies are on record saying they don’t envision ever needing to climb into this financial lifeboat. Meanwhile a new regulator will now be in place to approve all executive compensation, and ensure that taxpayers are paid back before investors.
“Our economy needs a lot of things right now, but more uncertainty certainly isn’t one of them,” added Congressman Baird. “This line of credit, and the safeguards that come with it, will hopefully stop this financial chaos and prevent it from happening again in the future.”
Additionally, the benefits of the legislation will reach into other aspects of the American economy. The housing slump has hammered construction firms and other businesses that depend on a strong housing market to keep people on their payrolls. The number of new residential construction projects has declined sharply for almost 2 years. Meanwhile, the slide has put almost half a million American construction workers out of work in just the past year.
“The American people are hurting, and despite what those who voted against this bill seem to believe, closing their eyes to the problem doesn’t make it go away,” concluded Congressman Baird. “Congress has stepped up and taken responsible and responsive action; hundreds of thousands people’s lives will soon be better because of it.”
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