Klobuchar Says Housing Solutions Are Needed to Strengthen Overall Economy

Press Release

Klobuchar Says Housing Solutions Are Needed to Strengthen Overall Economy

Holds forum in Hopkins to hear from families, builders, local communities

U.S. Senator Amy Klobuchar said today that the nation's mortgage foreclosure problems have deepened into a broader economic crisis that requires common-sense solutions. She said that middle-class Americans are increasingly being affected by the erosion of homeowner wealth, the downturn in housing-related industries such as construction, and a credit crunch that makes it harder for young families to become homeowners.

Klobuchar spoke in the Twin Cities suburb of Hopkins at a forum she organized to hear from Minnesotans about their concerns and to highlight solutions to the housing crisis that is now affecting all parts of the economy.

"As it drags down the whole economy, the housing crisis now affects all of us, even people who make their house payments every month," said Klobuchar. "When you combine a million foreclosures with a credit squeeze on potential homebuyers, it cuts into the value of everyone's home. Instead of sitting on the sidelines, Washington has a responsibility to address the housing crisis and get our economy moving forward again."

Klobuchar said more must be done to help state and local housing agencies refinance troubled subprime mortgages and increase funding for homeowner counseling programs designed to avoid foreclosures before they happen. She also called for strengthening truth-in-lending regulations to improve disclosure in mortgage documents so consumers get loans appropriate to their needs and circumstances.

Klobuchar is sponsoring the First-Time Homebuyers' Tax Credit, a bipartisan plan that would give qualifying first-time home buyers a credit of $3,000 for individuals and $6,000 for couples.

"With working five jobs between us and the state of the economy, we really could not have bought our first home without the FHA loan," said Christina Scipioni, who just bought a new home with her fiancé and participated in the housing forum. Last year, Congress increased the income eligibility to qualify for an FHA home loan. Legislation pending in Congress would raise the eligibility standards even further.

In Congress, Klobuchar serves on the Joint Economic Committee, which recently issued a report estimating that by 2009:

• Two million foreclosures will occur.

• Homeowners will lose more than $100 billion in housing wealth from the direct and indirect effect of foreclosures on home prices.

• State and local governments will lose $917 million in property tax revenue because of reduced home valuations.

Klobuchar noted that more than 20,000 Minnesotans lost their homes to foreclosure last year, and another 50,000 are more than 30 days delinquent on their mortgage payments.

She said that foreclosures are happening throughout the state. For example, in Hennepin County in February, 57 percent of home foreclosures were in suburban communities. According to a recent study by the Greater Minnesota Housing Fund and HousingLink, the five counties with the highest foreclosure rates for 2007 were projected to be Kanabec, Isanti, Mille Lacs, Sherburne and Wright.

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