Housing Package Will Bolster Housing Market

Press Release

To further deal with the housing crisis - the root cause of the current recession - Congresswoman Rosa L. DeLauro (CT-3) backed a broad housing rescue package that will help address home values and assist Americans struggling with the housing and credit crisis. The package of bills includes the American Housing Rescue and Foreclosure Prevention Act of 2008, and the Neighborhood Stabilization Act of 2008.

"Persistent problems with the housing market - which continues to see drops in home sales and prices - make recovering from the Bush recession increasingly difficult. With this housing rescue package we will help homeowners facing lost vales in their homes or foreclosure and begin to shore-up a key sector of the economy," said DeLauro.

The housing crisis has had a significant impact in Connecticut . One in 39 homeowners is projected to lose their homes to foreclosure over the next two years. Homeowners who do not lose their homes have also been hurt by the crisis. The Pew Charitable Trusts estimates that 35% of all Connecticut homeowners will feel the ripple effects of the housing crisis. The crisis could also cost the state and local tax base $2 billion.

The American Housing Rescue and Foreclosure Prevention Act of 2008 will provide mortgage refinancing assistance, which will help keep families from losing their homes and protect neighboring home values. The plan also expands programs run by the Federal Housing Administration (FHA) that will allow borrowers in danger of losing their homes to refinance into lower-cost government -insured mortgages they can afford to repay. The package includes a $7,500 refundable tax credit for first time homebuyers as well.

The plan requires both homeowners and lenders to take responsibility. In order to qualify for refinancing and a new government backed mortgages, lenders and mortgage investors will be required to take a loss and borrowers must share any profit from the resale of a refinanced home with the government. Additionally, the new plan is open only to owner-occupied homes. Speculators, investors and vacation/second-home owners are not eligible.

The Neighborhood Stabilization Act of 2008 provides $15 billion in loans and grants to states to acquire vacant, foreclosed homes. The legislation will allow local communities to rehabilitate foreclosed properties, which currently drive down surrounding home properties, and place these homes back on the market.

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