Congresswoman Hilda L. Solis (CA-32) today responded to the housing crisis by backing key legislation that will help improve home values and assist Americans who are struggling with the housing and credit crises and in danger of losing their homes. The American Housing Rescue and Foreclosure Prevention Act of 2008 and the Neighborhood Stabilization Act of 2008 were approved today by the House with bipartisan support.
"Owning a home is the American Dream, but thousands of Angelinos are on the brink of losing their homes and becoming the next victims of the housing crisis, a crisis that not only affects the individual homeowner, but also the economy of the local community," said Congresswoman Solis. "We must work together to strengthen and stabilize our communities and boost our economy. I am proud that these bills can help achieve those goals."
The housing crisis has had a significant impact in California. More than 228,133 families have lost their home to foreclosure, including 650 families in East Los Angeles and the San Gabriel Valley. The Pew Charitable Trusts estimates that this crisis could cost California $107 billion in state and local tax revenue.
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 home to refinance into lower-cost government-insured mortgages they can afford to repay.
The plan is not a bailout and 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 financed 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 House also passed the Neighborhood Stabilization Act of 2008, which 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.