DeLauro Backs Comprehensive Plan To Support Homeowners, Address Mortgage Crisis

Press Release

Congresswoman Rosa L. DeLauro (CT-3) joined with her colleagues to pass the most comprehensive response yet to the American mortgage 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 mortgage crisis has placed our families in a tenuous position and pushed our economy into a recession," said DeLauro. "Families have lost their homes, millions more are on the brink of foreclosure and homeowners have seen their property values plummet. That is why this Congress has stepped in to pass the American Housing Rescue and Foreclosure Prevention Act, which will help homeowners keep their homes, ensure the financial stability of American families and get our economy back on track."

Over the past two years the housing slump has brought down economic growth 0.87 percent below what it otherwise would have been. This is the most substantial drain on economic growth originating in the housing sector since 1975. Close to 20% of subprime mortgages taken between 2005 and 2006 are predicted to fail. Connecticut foreclosures in the third quarter of 2007 were up 920 percent from the same period the prior year. This fall the Governor's Task Force revealed more than 70,000 Subprime loans across the state - nearly 4000 in New Haven alone with 189 foreclosures.

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 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;

expands homeownership opportunities for veterans and helps returning soldiers avoid foreclosure and stay in their home;

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.

"Given the state of the economy and the challenges families across America are facing, I am pleased that the Congress could come together to address the mortgage crisis," said DeLauro. "While this is a positive step, I will continue to work with my colleagues to take additional action to strengthen the economy."

Source