The Foreclosure Prevention Act

Senate Floor Statement on the Motion to Proceed to the Foreclosure Prevention Act

Madam President, I am hopeful that we can proceed to a debate on this important Foreclosure Prevention Act without further delay. Homeowners across the country are suffering, and there are a number of things Congress could do to improve the worsening situation. We need to put aside partisan bickering and work together to keep families in their homes and keep this crisis from further weighing down our economy.

Since we last voted on whether to take up this measure in February, it has become even more obvious that the mortgage crisis is triggering a domino effect that threatens to weaken and undermine substantial portions of our financial system.

The situation is dire. In Michigan alone, nearly 80,000 homes are expected to be lost to foreclosure by 2009. My state has seen an increase in the number of foreclosure filings of 282 percent since 2005. Michigan is not alone in this crisis, nor are homeowners facing foreclosure and declining housing values the only ones being affected. Over the past few weeks we have seen the near collapse of investment bank giant Bear Stearns and an unusually active Federal Reserve working overtime to ease widespread concerns over our financial markets. At the root of these concerns is the fact that there is a long chain of investors and lenders relying on American homebuyers to pay what, in many instances, are shaky home loans.

It is urgent that we move forward on this bill to provide immediate help. Since we last tried to take up this bill, I have continued my series of roundtable meetings in Michigan communities. I have met with leaders from local and State government, as well as organizations who are in the trenches working with families facing foreclosure, to discuss practical ways to help homeowners and protect our economy from further damage. When I have asked for their feedback on this bill, they think it would help address a number of the problems they highlighted.

Across Michigan, everyone recognizes that declining home values affect not just those who are being forced into foreclosure or to sell at a loss, but everyone who owns a home, and the neighborhoods in which those homes are located. Many communities would like to rehabilitate abandoned and foreclosed properties so that surrounding property values do not continue to fall. But currently there are not funds to meet the growing demand. This bill provides $4 billion in Federal block grants to areas with the highest foreclosure rates and filings to help rehabilitate abandoned or foreclosed properties and prevent further damage to local housing values and neighborhoods.

I am encouraged by the work of many counseling organizations, such as those I met with during my roundtable meetings in Michigan, who are trying to help families avert foreclosure. But across Michigan, foreclosure prevention counselors are overwhelmed, and a lack of funds is tying the hands of local groups trying to help keep families on track. This bill would provide $200 million for this much needed pre-foreclosure counseling.

Because each new foreclosure affects the value of properties around it, in Michigan and across the nation, there are also many homeowners who are facing the financial pressures of owing more on their mortgages than the current dollar value of their houses, a situation known as being “underwater.” There is a critical need for more affordable loans to be made available to help these families refinance and stay in their current homes. Most homeowners do not want to uproot their children and leave their community behind, even if the balance of their mortgage is greater than the current market value of their home.

This bill would help address this problem by authorizing states to issue $10 billion in new tax-exempt bonds to help homeowners refinance adjustable rate mortgages. Providing refinancing options for homeowners in potentially solvent situations is an important component in the effort to reverse the current tide of foreclosures.

Ending the foreclosure crisis will require a team effort among Federal, State, and local governments, community and neighborhood organizations, and lenders, brokers, and borrowers. This bill recognizes that fact. It provides an opportunity to help keep struggling families in their homes. It provides an opportunity to help restore our housing markets by keeping declining property values stable. It will protect neighborhoods from a glut of vacant homes. We need to take up this bill now, debate it, consider amendments, and then pass it. To not do so would be to sit idly by while too many needlessly suffer.

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