Keeping Families in Their Homes

Statement

Keeping Families in Their Homes

More and more homeowners are having trouble keeping up with their mortgage payments, particularly when they have adjustable rate mortgages (ARMs). Michigan has seen an increase in the number of foreclosure filings of 282 percent since 2005.

The foreclosure crisis in Michigan has compounded the crisis in manufacturing. Although the U.S. has lost three million manufacturing jobs since he took office, the Bush Administration continues to disregard our manufacturing sector. While we await an administration that will support a broad based American manufacturing initiative that can boost our economy as a whole, we also need to act immediately to address the mortgage crisis directly.

That will require a team effort among federal, state and local governments, community and neighborhood organizations, and lenders, brokers and borrowers. A comprehensive solution is the only way to keep people in their homes and to maintain a housing market where families will have an opportunity to own a home and where property values are stable.

Recently I convened a series of roundtable meetings in a number of Michigan communities. Leaders from local and state government as well as organizations that are in the trenches working with families facing foreclosure came together to discuss practical ways to help homeowners and protect our economy from further damage.

Participants in the meetings said that communities would like to rehabilitate abandoned and foreclosed properties so that surrounding property values do not fall. But currently the funds do not exist to do that.

We heard that foreclosure prevention counselors are overwhelmed and that a lack of funds is tying the hands of local groups trying to help keep families on track.

We also heard that many homeowners face the financial pressures of owing more on their mortgages than the dollar value of their houses. Participants in the meetings discussed the need for more affordable loans that would 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.

The Senate is considering a housing stimulus package that includes a number of proposals to address some of the problems raised in my roundtable meetings. The bill includes increased federal grants to areas with the highest foreclosure rates to help rehabilitate abandoned properties and prevent further damage to local housing values. The bill also provides funds for pre-foreclosure counseling, and it authorizes states to issue new tax-exempt bonds to help homeowners refinance adjustable rate mortgages.

Congress has already taken some modest action to help limit the impact of the foreclosure epidemic for taxpayers. In December we passed the Mortgage Forgiveness Debt Relief Act, based on Senator Debbie Stabenow's legislation that I cosponsored, which allows homeowners to have their mortgage debt forgiven by a lender without being penalized on their income tax returns. Previously, the forgiven debt was taxed as income, resulting in a significant and unexpected tax bill that further exacerbated financial problems of homeowners trying to avoid foreclosure.

In my meetings with Michigan citizens who are working on foreclosure issues, they made clear that a number of commonsense measures can be helpful in confronting this problem. Hopefully Congress will enact some of these measures shortly. I will continue to work for legislation that will make a difference for Michigan homeowners who find themselves on the ropes. Effective action to address the mortgage crisis is critical for us to secure Michigan's and this nation's economic future.

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