Neighborhood Stabilization Act of 2008

Floor Speech

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Mr. VAN HOLLEN. Speaker, I rise in support of the second amendment to the American Housing Rescue and Foreclosure Prevention Act of 2008.

Today, one quarter of subprime adjustable-rate mortgages are delinquent by 90 days or more. As a consequence, during 2007, foreclosure proceedings were initiated on about 1.5 million U.S. homes. The Federal Reserve has projected that the rate of foreclosures will grow even higher in 2008.

We know that many of these foreclosures are unavoidable. There are cases where investors choose foreclosure because a property's value has depreciated significantly, or a borrower's personal circumstances have changed. And, many times, as has recently become alarmingly prevalent, a borrower was put into a loan inappropriate for their circumstances. But, if a foreclosure is preventable, and the borrower wants to stay in the home, the economic argument for trying to avolid foreclosure is strong.

Foreclosures impose high legal and administrative costs. Foreclosures can destabilize communities, reduce area property values and lower municipal tax revenues. And, at the national level, foreclosures add to the stock of homes for sale, increasing downward pressure on home prices, which affects the broader economy.

In the past, mortgage defaults were usually triggered by a borrower's life event, such as the loss of a job, serious illness or injury, or divorce. But the widespread decline in home prices we are witnessing today is a relatively new phenomenon and lenders, servicers and policymakers will have to develop new strategies to meet this new challenge.

To be effective, our approach must closely target the borrowers at the highest risk of foreclosure while avoiding programs that give borrowers, who can make their payments, an incentive to default.

The American Housing Rescue and Foreclosure Prevention Act will address these problems. The bill's second amendment contains several housing-related tax provisions recently reported by the Ways and Means Committee as part of the Housing Assistance Tax Act.

The amendment creates a refundable tax credit of up to $7,500 for first-time homebuyers that would serve as an interest-free loan, and provides an additional standard deduction in 2008 of up to $350 for individuals and $700 for couples for state and local property taxes. It authorizes an additional $10 billion in taxexempt bonds that would be used to refinance subprime loans, finance the construction of low-income rental housing, and support loans to first-time homebuyers.

To assist our men and women in uniform, many of whom have put themselves in harms way in service to their country, the amendment adds provisions from a measure approved by the Veterans Affairs Committee that extends to one year, from 90 days, the period following active duty service during which service members are protected from foreclosures.

This amendment will fully offset the cost of its tax provisions in two ways. First, by raising $8 billion through FY 2018 by requiring brokers to report their customer's basis in securities transactions, and second, by raising $3.2 billion through FY 2018 by delaying, until 2010, new rules allocating interest expenses between foreign and domestic sources.

Madam Speaker, I am proud to stand today in support of the second amendment to The American Housing Rescue and Foreclosure Prevention Act of 2008 and I urge my colleagues to join me.

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