House Acts to Combat Mortgage Crisis
May 8th, 2008 by Jesse LeeToday, the House passed a package of housing measures that will help families facing foreclosure keep their homes, help other families avoid foreclosures in the future, and help the recovery of communities harmed by empty homes caught in the foreclosure process. The package is the most comprehensive response yet to the American mortgage crisis.
The American Housing Rescue & Foreclosure Prevention Act, H.R. 3221, will provide mortgage refinancing assistance, which will help keep families from losing their homes and protect neighboring home values and was passed in a series of three different votes (1, 2, 3). The plan also expands programs run by the Federal Housing Administration (FHA) that will allow borrowers in danger of losing their home to refinance into lower-cost government -insured mortgages they can afford to repay. The Neighborhood Stabilization Act, H.R 5818, will provide $15 billion in loans and grants to states to acquire vacant, foreclosed homes and was passed by a vote of 239-188. The legislation will allow local communities to rehabilitate foreclosed properties, which currently drive down surrounding home properties, and place these homes back on the market.
Learn much more in our current legislation section >>
Financial Services Chairman Barney Frank, Rep. Richard Neal (MA-02) and Rep. David Scott (GA-13) spoke in favor of the American Housing Rescue & Foreclosure Prevention Act:
Chairman Frank: “So I accept the gentleman from Arizona who is reminding me I should stay true to free market principles. This bill is true to free market principles. And let me quote one of the leading advocates of free market principles in the English-speaking world, the Economist, called to my attention by the staff of the Financial Services Committee, which has done enormously good work… Here’s what the Economist said: ‘The plan is hardly a bailout.’ Talking about this bill. This is the current Economist. ‘Lenders would have to write down their loans to 85% of the current value of the house. By the way under FHA security administration’s plan, they can get 100% loan put in… we require an 85% write-down to the value. Borrowers would pay a fee for insurance and give up a share of any later price rise to the government… People worry about moral hazards, I would assure people: no borrower who goes through this process will say at the end of it, ‘boy that was fun, where do I buy a ticket to get back on space mountain.’ So they will be deterred, but we’re not relying solely on that…” |
Rep. Neal: “Let me see what I can do to lift the spirits of the gentleman from New York, my friend, Mr. Reynolds. And in fact I think what’s sad is that you’re leaving us, that you’re retiring. And I was searching hard to figure out the meaning of that acronym based upon the fact that the Ways and Means Committee took this legislation up, and I want to reiterate for the fourth time today, 12 of the 17 Republicans on the Committee voted for the very bill that they’re now all saying they’re going to oppose. Forgive me. That’s sad. How you can come to the floor and argue against the proposal that you voted for in the committee when you agree with just about every part of the bill?” |
Rep. Scott: “You know, I’m wondering whether the Republicans are looking at the same America that I’m looking at. And that the American people are feeling. Between 7,000 and 8,000 American families are filing for foreclosure every day. While we’re up here debating this bill, the last day and today, over 15,000 American families have filed for foreclosure. We have a crisis. Now I want to deal with three points here right quick in my three minutes. The first one is this: I think it is wrong as wrong can be for the other side to continually blame this crisis on the backs of the American family. Let me read here for a moment from this morning’s Hill paper…” |
Chairwoman Maxine Waters of the Financial Services Subcommittee on Housing and Community Opportunity, Rep. Keith Ellison (MN-05) and Rep. Al Green (TX-09) spoke in favor of the Neighborhood Stabilization Act:
Chairwoman Waters: “…foreclosure filings during the first quarter of 2008 are 112% higher than one year ago, and that actual bank reposessions of homes during March were a shocking 129% above March, 2007. The human reality behind these numbers is revealed if you visit, as I have in the past year, cities and communities in cities like Cleveland, Ohio, Detroit, Michigan, or the San Bernadino and Stockton metropolitan areas in California where block after block is dotted by foreclosed properties, many of them suffering from neglect or actual vandalism. These abandoned and foreclosed properties drag down the value of homes still occupied by working families and contribute to a cascade effect…” |
Rep. Ellison: “Let me just say this, the fact of the matter is that for the people who paid every single mortgage payment and were never late even one time, they are suffering because of this mortgage crisis because they live on a block with foreclosed homes. This bill saves money. Can you imagine the cost to a city in terms of fire, police and public works resources just to be able to deal with a home that’s foreclosed on a block? This is saving money. This is actually improving the quality of life for people all over America and this amount of money that we will spend on this bill will pay thousand-fold in terms of quality life for people all over this country.” |
Rep. Green: “Hope Now is good. However, help now is better. We didn’t give Penn Central Hope Now, we gave Penn Central a $7 billion bailout. Lockheed Martin got a $200 million bailout. Franklin National Bank $1.7 billion bailout. Chrysler, $1.5 billion bailout. Continental Illinois $4.5 billion bailout… First Republic, $1 billion bailout. Major Airlines, $5 billion bailout. Steel companies $7 billion bailout. And Bear Stearns, if we talk about the bare facts, $29 billion plus a $13 billion loan through JPMorgan which makes a total of $42 billion if we talk about the bare facts.” |