Reform Would Keep Families in Homes and Away from Devastating Foreclosures
As foreclosures resulting from subprime mortgages take a devastating toll on communities across the country, Senators Gordon Smith (R-OR) and John Kerry (D-MA) are urging the Finance Committee to include mortgage financing assistance in the economic stimulus package currently being developed.
"When a family loses its home, no matter the reason, the entire community suffers both emotionally and economically," Smith said. "We must make help available to those who need it most."
"There's no decent economic stimulus package that doesn't help save families from foreclosure. Today we have middle class homeowners barely hanging on to their homes and in dire need of relief," said Kerry. "We want an economic stimulus bill that allows state and local housing agencies to issue additional tax exempt bonds to help more families refinance loans, stay in their homes and limit the number of vacant houses and buildings popping up in our neighborhoods. This is a rough time on both Main Street and Wall Street, and we must do all we can to make sure that short term pain is relieved before it gives way to a long term recession. I want to thank Sen. Smith for working with me on this effort."
It is estimated that roughly 2.5 million mortgages were in default in the third quarter of 2007 - a 40 percent increase from 2005. Under current law, state and local governments may issue bonds to finance new mortgage loans to first-time homebuyers. Legislation proposed by Senators Smith and Kerry (S. 2517) would temporarily expand the use of this program to include refinancing of subprime loans. The proposal would also allow states to issue up to $15 billion in additional bonds over the next three years. This would allow first-time homebuyers facing foreclosure the opportunity to refinance at a safe, fair rate.
The Committee on Finance is currently working to develop an economic stimulus package. The legislation is expected to be debated later this month.