Congressman Sander Levin

The Housing Crisis

The current turmoil in the financial markets began with the mortgage industry. Irresponsible and predatory lending practices in the subprime market led to widespread defaults as interest rates adjusted upward and borrowers fell behind on their mortgage payments. A lack of regulation of Wall Street amplified the problem as financial institutions tried to make money on these mortgage-backed securities.

Foreclosure is not just a crisis for individual households. If your home is within an eighth of a mile of a foreclosed property, its value could drop by an average of $5,000. Falling property values lead to lower revenues for local governments and school districts, and vacant homes place higher demands on already thin municipal resources. In Michigan, $3.8 billion is projected to be lost from the combined state and local tax base as a result of the housing crisis.

This year Congress passed legislation establishing the [Hope for Homeowners] program, which can help borrowers at risk of foreclosure refinance into affordable fixed-rate mortgages. Under the program, lenders must take a loss, and borrowers must share with the government any profit from the resale of a refinanced home. Hope for Homeowners became effective on October 1, 2008, and it will be available through September 30, 2011. Lender participation is voluntary, but hundreds of thousands of borrowers may be able to remain in their homes with support from the program.

Congress also approved the [Neighborhood Stabilization Program], which will help state and local governments purchase foreclosed homes to help communities avoid the problems associated with empty, blighted properties. More than $263 million has been allocated by the Department of Housing and Urban Development for Michigan communities, including nearly $10 million for Macomb County and more than $17 million for Oakland County.

These programs are important initial steps, but Congress and the President must do more to help homeowners. Every current and aspiring homeowner has a stake in the outcome.

How Does the Housing Bill Help Homeowners in Distress?

Homeownership Help for You or Someone You Know

Foreclosures affect us one and all