Our nation is facing its greatest economic crisis since the Great Depression. A collapse of the housing market has had far-reaching consequences, putting an already-stressed financial system in peril. No group escapes blame for this. Many borrowers took unnecessary risks, and many of them were given bad information by financial institutions, pushing them into mortgages they didn't understand and couldn't afford. The entire system needs to be reformed.
Since 2000, I have been concerned about predatory lending and have supported legislation to stop the excesses that these lenders have too often hoodwinked homeowners into accepting. At the same time, some borrowers inflated their incomes and misrepresented themselves in order to get bigger homes than they could actually afford. In October 2007, I sent a letter to Treasury Secretary Paulson asking him to take additional emergency steps to avert a dramatic increase in home foreclosures. I am also a cosponsor of legislation introduced by Senator Durbin that would allow judicial modification of a debt secured by the debtor's primary residence.
Thankfully, foreclosures in Massachusetts dropped more than 25 percent last year compared with 2008. Unfortunately, during the same time period nearly 28,000 Massachusetts homeowners received foreclosure petitions, which is the first step in the foreclosure process. This is a 28 percent increase over 2008. The additional foreclosure petitions are due to higher unemployment rates and more homeowners who are "underwater," living in properties that are worth less than what they owe on their mortgages. After four years of declining sales, single-family home sales in Massachusetts crept up three percent in 2009 from 2008. At the same time, median home prices dropped more than six percent from 2008 and are almost 20 percent lower than the market peak in 2005.
With foreclosures devastating the lives of American families each day, the federal government needs to take immediate action to stop this tidal wave before it causes more serious damage to our economy.
I have worked in the Senate to assist well-intentioned homeowners who, with a little assistance, can make their payments and avoid foreclosure and a downward spiral into bankruptcy. These families are not trying to get a free ride. They aren't scam artists trying to get away without paying their mortgage. They are hard-working, tax-paying, honest people who too often had the misfortune of being taken advantage of by mortgage lenders unconcerned with the chaos they were creating.
Last year, I enacted legislation to help renters stay in their homes for at least 90 days when their landlords losing their property to foreclosure. Such renters are completely blameless victims in the foreclosure catastrophe that hit our country. Also under this new law, tenants with a lease will have the right to remain in the unit until the end of the existing lease.
I supported the Housing and Economic Recovery Act which was enacted into law in August 2008 which included the tax credit for first time homebuyers. The law included provisions I wrote to provide $11 billion for the Mortgage Revenue Bond program to provide mortgage credit and lower the number of vacant homes; Increase protections from foreclosure and from increasing mortgage interest rates for our veterans returning from Iraq and Afghanistan; and producing affordable rental housing by establishing the National Affordable Housing Trust Fund.