WASHINGTON, DC – Congresswoman Carolyn B. Maloney (D-NY) backed key legislation that would assist Americans who are in danger of losing their homes and help improve home values in distressed communities. “The American Housing Rescue and Foreclosure Prevention Act of 2008” (H.R. 3221) and “The Neighborhood Stabilization Act of 2008” (H.R. 5818) were approved by the U.S. House of Representatives today with bipartisan support.
“Thousands of New Yorkers are on the brink of losing their homes and becoming the next victims of this housing crisis. These foreclosures could have a devastating impact on families, communities, and our broader economy,” said Rep. Maloney. “The housing crisis is the root cause of our weakening economy, and the critically important legislation we passed will help restore order and provide us with a roadmap forward. I urge the President to reconsider his misguided veto threat of these bills, and work with the Congress to help keep families in their homes and get our economy back on track.”
The housing crisis has had a significant impact on New Yorkers. One in 32 New York homeowners is projected to enter foreclosure over the next two years.
Even homeowners who do not enter foreclosure have been hurt by this crisis. The Pew Charitable Trusts estimates that 52 percent of all homeowners will likely feel the ripple effects of the housing crisis. Communities are negatively affected as foreclosures drive down home prices overall, diminishing homeowners’ equity in entire neighborhoods. Costs also accrue to local governments in the form of lost tax revenue and direct expenses for securing, policing, and disposing of abandoned properties.
“The only way we are going to solve the housing crisis is through a comprehensive, multi-pronged strategy,” continued Rep. Maloney. “We have already fully engaged the regulators and the industry is now working with homeowners, but we also need sound public policy that will allow struggling homeowners to refinance sky-high subprime loans into mortgages they can afford. Now that we’ve helped Wall Street, it’s time to help Main Street.”
“The American Housing Rescue and Foreclosure Prevention Act of 2008” would provide mortgage refinancing assistance, which would help prevent families from losing their homes and protect neighboring home values. The bill would also expand programs run by the Federal Housing Administration (FHA) that allow borrowers in danger of losing their home to refinance into lower-cost government-insured mortgages they can afford to repay. Without this important provision, the FHA refinancing loan limit on New York City homeowners would drop from $729,750 to $362,000 at the end of the year. The bill also modernizes the reverse mortgage provision administered by FHA, allowing co-ops to be included for the first time, and preserves affordable FHA-insured foreclosed multi-family projects. In addition, the bill includes an amendment Rep. Maloney offered to provide for higher loan limits on homes that include a licensed child care facility.
The legislation is not a bailout. It requires both homeowners and lenders to take responsibility. In order to qualify for refinancing and a new government-backed mortgage, lenders and mortgage investors would be required to take a loss and borrowers must share any profit from the resale of a refinanced home with the government. The new plan is also only open to owner-occupied homes; speculators, investors, and vacation/second-home owners are not eligible.
“The Neighborhood Stabilization Act of 2008” would provide $15 billion in loans and grants to states to acquire vacant, foreclosed homes. The legislation would allow local communities to rehabilitate foreclosed properties, which currently drive down surrounding home properties, and place these homes back on the market.
BACKGROUND:
In February of 2008, Rep. Maloney held a hearing on the effects of the subprime mortgage crisis in New York City: http://maloney.house.gov/index.php?option=com_content&task=view&id=1574&Itemid=61.
On November 15, 2007, the House approved H.R. 3915, the “The Mortgage Reform and Anti-Predatory Lending Act of 2007,” to establish a national standard to rein in the abusive lending practices that contributed to the current mortgage crisis. This comprehensive legislation would create a licensing system for residential mortgage loan originators, establish a minimum standard requiring that borrowers have a reasonable ability to repay a loan, and would attach a limited liability to secondary market securitizers. The legislation would also expand and enhance consumer protections for “high-cost loans,” include protections for renters of foreclosed homes, and establish an Office of Housing Counseling through the Department of Housing and Urban Development. The bill is currently pending in the Senate.
On September 18, 2007, the House passed H.R. 1852, the “Expanding American Homeownership Act of 2007,” which would revitalize the Federal Housing Administration (FHA), a federally insured loan program that for over 60 years has been a reliable source of affordable fixed rate mortgage loans, especially for first-time homebuyers. The measure would enable FHA to serve more subprime borrowers at affordable rates and terms, recapture borrowers that have turned to predatory loans in recent years, and offer refinancing loan opportunities to borrowers struggling to meet their mortgage payments in the midst of the current turbulent mortgage markets. The bill is currently pending in the Senate.
On May 23, 2007, the House passed H.R. 1427, the “Federal Housing Finance Reform Act of 2007,” which would overhaul the regulatory oversight of the government-sponsored enterprises of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and create a new, independent regulator with broad powers analogous to current banking regulators. The regulator’s primary responsibility would be to ensure the safety and soundness of the institutions. In addition, the bill creates an off-budget and non-taxpayer-financed affordable housing fund, which would dedicate hundreds of millions of dollars for the construction, maintenance and preservation of affordable housing with the first year of the fund to be dedicated to the hurricane-stricken areas of the Gulf Coast, and billions of dollars over the next five years for affordable housing nationwide. The bill is currently pending in the Senate.
