House Leadership Agrees to Include Funding Sought by Rep. Waters to Stabilize Neighborhoods

Press Release

Senate Passes $4 Billion to Purchase and Fix Up Foreclosed Property; House Bill to Include Funds

Congresswoman Maxine Waters (D-CA) announced today that the comprehensive housing legislation soon to be voted on soon by the U.S. House of Representatives will include $4 billion in funding for states, counties and cities to purchase and fix up foreclosed properties in order to stabilize neighborhoods. Congresswoman Waters noted that the House Democratic leadership have made a commitment to keep language passed by the Senate in the Housing and Economic Recovery Act of 2008 (H.R. 3221) to assist communities hit hardest by the national foreclosure crisis.

"I am pleased that Speaker Nancy Pelosi and Financial Services Committee Chairman Barney Frank have agreed to support the inclusion of $4 billion in vital funding for America's neighborhoods," said Congresswoman Waters, who chairs the Financial Services Subcommittee on Housing and Community Opportunity. "This funding is vitally important to help communities overcome the problems of foreclosures such as crime, blight, and declining home values."

Concerned about the effect of the subprime mortgage meltdown on neighborhoods in Los Angeles, throughout California and across America, Congresswoman Waters introduced the Neighborhood Stabilization Act (H.R. 5818), which authorizes a federal grant and loan program to help state and local governments purchase, rehabilitate, and resell or rent foreclosed homes and in turn create rental and ownership opportunities for low- and moderate-income families. The House passed her legislation earlier this year, and a broad-based coalition of groups known as the Save America's Neighborhoods Campaign worked hard to make sure that Congress includes neighborhood stabilization funding as part of its major response to the foreclosure crisis.

The foreclosure crisis, fueled by subprime mortgages, has resulted in significant property revenue losses for states, counties and local governments. Because many state and local governments must balance their budgets each year, 20 states have already had to make or are proposing budget cuts due largely to revenue losses. These budget cuts further harm the economy and deepen the recession.

Despite severe fiscal constraints, many states and cities are already dedicating their own shrinking tax revenues to purchase foreclosed properties and stabilize neighborhoods. However, states and cities are overwhelmed by the scale of the housing foreclosure problem and unable to adequately respond without federal assistance. As a result, governors, mayors and county legislators support federal funding to help acquire and rehabilitate foreclosed properties.

In developing legislation, Congresswoman Waters focused on finding a solution that reflects a sound approach to providing this critical fiscal relief to states and localities. Her bill targets assistance where it is most needed as determined by the number of foreclosures and the number of subprime loans 90 days delinquent and then adjusted to account for median home price. In addition, the legislation would get funds out to communities quickly but not result in permanent expenditures, by requiring fund obligation to begin within six months of enactment, be fully obligated within a year and fully spent within 2 years of enactment.

Congresswoman Waters' legislation was endorsed by a wide range of civil rights, community development, labor, and low income housing groups, including the AFL-CIO, AFSCME, Catholic Charities, Habitat for Humanity, the NAACP, the National Urban League, the National Low Income Housing Coalition, and 17 national organizations comprising the National Foreclosure Prevention and Neighborhood Stabilization Task Force. (A longer list of organizations supporting emergency stabilization funding can be found at www.saveamericasneighborhoods.org)

Although H.R. 5818 passed the House earlier this year, neighborhood stabilization funding was not originally included in H.R. 3221, the housing legislation taken up by the Senate. Congresswoman Waters advocated effectively to make sure that the Senate included such funding, writing Senator Chris Dodd, the Banking Committee Chair. She also worked with the Congressional Black Caucus (CBC) as well as housing advocacy organizations to have the Senate language included in the bill when it came back for House consideration.

CBC Members sent a letter to Speaker Pelosi and Senate Majority Leader Harry Reid emphasizing the importance of passing legislation that included emergency neighborhood stabilization funding. Their letter noted that while the foreclosure crisis has hurt many communities across the nation, African-American neighborhoods have been disproportionately affected as the African-American community was targeted for high cost, predatory subprime loans.

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