Washington, DC – To help stabilize the housing market, U.S. Rep. John Hall (D-NY19) helped the House pass a comprehensive plan yesterday to stem the tide of foreclosures, shore up the housing market, and restore confidence in Fannie Mae and Freddie Mac. H.R. 3221, The American Housing Rescue and Foreclosure Prevention Act passed the House by a vote of 272-152. The Senate is expected to pass the legislation on Saturday. President Bush rescinded his threat to veto the legislation on Wednesday, meaning the legislation is set to become law.

 

"None of us can afford to have foreclosed, empty or boarded up houses in our neighborhoods," said Hall. "School districts, towns and citizens alike suffer as surrounding properties decline. This is a responsible bill to prevent a devastating ripple effect in our economy."

Mortgage foreclosures in June of 2008 were elevated from their 2007 levels by more than 50 percent. For the first time since World War II, mortgage debt exceeds equity for American homeowners.

 

New York has been hit particularly hard by the housing crisis. There will be an estimated 124,601 foreclosures in the state this year and one in 32 New Yorkers is expected to face foreclosure. The ripple effects of foreclosures from 2005 and 2006 are projected to reduce the property values of more than half of New York homes by an average of $18,000.  The combined state and local tax base in New York could lose $65 billion.  Thus far, over 3.5 million New York homes have been devalued as a consequence of foreclosures in their neighborhoods.

 

The centerpiece of the housing rescue package would help many homeowners refinance their mortgages into lower-cost government-insured mortgages that they can afford to repay, preventing the economic pain that further foreclosures would inflict on families and neighborhoods.  The bill would also allocate resources to states and municipalities to buy and rehabilitate foreclosed properties that have been depressing neighborhood property values and reducing state and local revenues.

 

"This is the most comprehensive response yet to the housing market problems whose full effects we probably haven’t even seen," said Hall.  "It will help at-risk borrowers refinance out of subprime loans and avoid further foreclosures, encourage more construction after the loss of more than 400,000 construction jobs, and ensure responsibility at the government-sponsored lending giants."

 

To address recent concerns about Freddie Mac, Fannie Mae, and the Federal Home Loan Banks, while ensuring the continued availability of affordable home loans, this legislation would also establish a new, independent regulator to oversee these housing-related Government Sponsored Enterprises (GSEs).  Moving forward, the new regulator would be much better able to ensure the sound operation of the GSEs, which have served as the foundation of many Americans’ path to homeownership.

In order to further boost housing market confidence, the bill would also grant the Treasury Department authority to temporarily assist the GSEs in the unlikely event further intervention becomes necessary.  To protect taxpayers and prevent a bailout at the expense of taxpayers, any Treasury assistance given under this arrangement would have to be repaid before investors, and executive pay and compensation at the GSEs will be subject to the approval of the new regulator. 

 

The bill also includes: