Comprehensive Housing Legislation Passes House

Press Release

Today, Congressman Jerry McNerney (CA-11) backed the most comprehensive response yet to the American mortgage and housing crisis. The American Housing Rescue and Foreclosure Prevention Act will help families keep their homes, aid local communities hit hard by the foreclosure crisis and strengthen the economy and financial markets. The bill, H.R. 3221, was passed today in the House by a vote of 272-152.

The package included two provisions authored by Congressman Jerry McNerney (CA-11), one to specifically aid veterans facing foreclosure to keep their homes and another to permanently raise the loan limits for Fannie Mae, Freddie Mac, and the Federal Housing Administration.

"The mortgage crisis affects all of us and it's had a particularly large impact in San Joaquin County and parts of Eastern Contra Costa County," said Rep. McNerney. "Families have lost their homes, homeowners have seen property values nosedive and neighborhoods have become destabilized. The bill I backed today will help families keep their homes and get our economy back on track."

Rep. McNerney's provision to aid veterans was originally offered as an amendment to H.R. 4884, the Helping Our Veterans to Keep Their Homes Act of 2008. It increases the limit on VA-backed refinancing loans, the maximum value of which is currently $144,000, making them virtually useless in many parts of the country, especially Northern California.

Rep. McNerney also previously introduced H.R. 5958, the Homeowner Opportunity Act of 2008, which was incorporated into the final housing package, makes permanent the loan limit increases for Fannie Mae, Freddie Mac and the Federal Housing Administration that were raised temporarily through the Economic Stimulus Act signed into law in February.

The provision increases the loan limit to $625,000, creating responsible opportunities for families to obtain fixed-rate mortgages and helping to alleviate the current market difficulties by increasing the availability of credit in the market. The provision would mean increased access to stable mortgage products in all four counties in the 11th district: Alameda, Contra Costa, San Joaquin and Santa Clara.

The American Housing Rescue and Foreclosure Prevention Act will allow hard-working American families in danger of losing their home to refinance into lower-cost, government-insured mortgages they can afford to repay - at no cost to the American taxpayer. The legislation also:

* Strengthens neighborhoods hardest hit by the foreclosure crisis by providing nearly $4 billion in resources to allow cities and states to buy up and rehabilitate foreclosed properties that are currently driving down home prices, reducing state and local revenues, and destabilizing neighborhoods;
* Provides tax breaks to spur home buying; and
* Creates a new fund to boost the nation's stock of affordable rental housing in both rural and urban areas for low and very low-income individuals and families.

The legislation passed today also includes provisions that will help restore confidence in financial markets and shore up Fannie Mae and Freddie Mac. The bill provides the Department of the Treasury with emergency and temporary financing authority for Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are important institutions that hold or guarantee nearly half of all mortgages in the United States.

Yesterday, the Congressional Budget Office Director Peter Orszag said there was "a significant chance, probably better than 50 percent, that the proposed new Treasury authority would not be used before it expired at the end of December 2009."

The legislation has earned the support of Democrats and Republicans in both the House and Senate and President Bush has indicated that he will sign the bill into law.

The housing crisis has significantly affected California, particularly Stockton and surrounding San Joaquin County which have found themselves at the top of the national foreclosure list. Statewide in California, according to the Pew Charitable Trusts, one in 20 homeowners is projected to lose his or her home to foreclosure over the next two years.

Homeowners who do not lose their homes have also been hurt by the crisis. Pew also estimates that 64 percent of all California homeowners will feel the ripple effects of the housing crisis and that the collective statewide loss in state and local taxes will reach $107 billion as a result of declining property values. According to Senate Banking Committee Chairman Chris Dodd, the foreclosure of a home on a typical city block generates two immediate related outcomes: the value of every other home on that block declines by one percent and the crime rate climbs two percent.

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