Housing and Economic Recovery Act of 2008

hmoroz — Fri, 25 Jul 2008 11:21:47 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Percent increase of foreclosure filings from June 2007 to June 2008: 53

Approximate value of mortgages that Fannie Mae and Freddie Mac own or guarantee: $5.2 trillion

Total residential mortgage debt outstanding in the first quarter of 2008: $12.1 trillion

Total outstanding public debt: $9.5 trillion

Percentage of new mortgages Fannie Mae and Freddie Mac currently originate or guarantee, according to Treasury Secretary Henry Paulson: 70

Number of homes that will experience devaluation because of subprime foreclosures that take place nearby: 40.6 million

Average decline in property values for homeowners living near foreclosed properties, in dollars: 5,000

Overview/Summary

Middle Class Position Analysis

Middle Class Supports. As many as 2.5 million families could lose their homes to foreclosure in 2008. At the same time, growing doubts about the solvency of Fannie Mae and Freddie Mac threaten to further destabilize the entire U.S. economy. Congress is not acting a moment too soon..

The refinancing program created by the American Housing Rescue and Foreclosure Prevention Act will have concrete results for middle-class homeowners facing the frightening prospect of foreclosure. Although participation in the program is voluntary for lenders, many are expected to participate and the measure is projected to help approximately 400,000 homeowners. Because the bill forces lenders to write down the principal by at least 10%, the program offers a less generous bailout to mortgage lenders than it otherwise might. Since irresponsible lending is a major cause of the current financial and home equity crisis, the effort to restrict the tax-payer funded bonanza for these lenders is beneficial.

The $4 billion of CDBG funds authorized by the legislation addresses two important problems plaguing aspiring middle-class Americans: the community breakdown that can result from vacant foreclosed homes in neighborhoods across the country and the lack of affordable housing in many communities. Middle-class Americans who are current on their mortgages and face no personal risk of foreclosure are nevertheless harmed when a foreclosed home down the street brings down property values, erodes the local tax base, and threatens to become a magnet for crime. The Center for Responsible Lending has shown that approximately 40.6 million homes will experience devaluation because of nearby subprime foreclosures, that homeowners living near foreclosed properties will lose approximately $5,000 on the value of their homes, and that approximately $200 billion dollars in house values and tax base will be lost from nearby foreclosures. By funneling federal money to local agencies to serve lower- and extremely low-income individuals, the CDBG funds will help neighborhoods recover from the harm done to their communities by foreclosures while helping to ensure that neighborhoods can accommodate aspiring middle-class Americans.

While the Congressional Budget Office believes that there is a 50% or better chance that Treasury will not have to use its new authority to purchase stock in the GSEs, the enactment of this authority reassures markets that the federal government is willing to serve as a backstop if Fannie Mae and Freddie Mac continue to falter. Because these secondary mortgage lenders hold or guarantee approximately half of all mortgages, their failure would have devastating consequences for middle-class families and the American economy as a whole. The promise of a bailout is regrettably necessary to prevent further market destabilization.

Increased oversight of the GSEs will be crucial to ensuring that the government-backed entities minimize taxpayer risk, while making mortgages affordable to middle-class Americans. Standards for a mortgage licensing and registration system and enhanced mortgage disclosure requirements are forward-looking measures that will help prevent the predatory lending and other improper lending practices that contributed to the foreclosure crisis.

Quotes from Experts

Beyond this Bill

Additional Resources

Mortgage Lending, from the Center for Responsible Lending

Housing Policy, from the Center on Budget and Policy Priorities

A Brief History of Fannie Mae and Freddie Mac, from Time

Affordable Housing Trust Fund Act of 2007

atraub — Wed, 12 Dec 2007 14:47:29 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Average percentage of affordable and available homes for rent for every 100 extremely low-income households, nationally: 38

Proportion of households spending more than 50% of their income on housing, according to a Harvard study: 1 in 7

Increase in the number of such “cost-burdened” households from 2001-2005: 3.2 million

Number of states where more than a quarter of all low-income households are paying more than half of their income on housing: 50

Number of states that have established affordable housing trust funds but have not dedicated funds to them: 6

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. For low-income workers striving to work their way up to a middle-class standard of living, the soaring cost of housing – for renters as well as owners – is a daunting obstacle. More than one out of every seven American households spends more than half their income just to keep a roof over their heads. What’s more, the lack of affordable housing extends not only to traditionally high-cost areas on the East and West coasts, but into the metro areas of cities like Indianapolis and Denver as well. In this case, the market has simply failed to meet a critical human need. This legislation provides a streamlined means for the public to fund low-income housing that will not be created by any other means. Channeling funds through states and localities provides the flexibility to meet local needs, while the strong federal criteria for the types of projects that are eligible ensures that the trust will benefit those who need it most. The establishment of a National Affordable Housing Trust fund to build, repair, and maintain housing will help more than a million American families find safe, stable homes – a prerequisite for working towards the middle class.

Quotes from Experts

Beyond this Bill

Additional Resources

The National Low-Income Housing Coalition on the National Housing Trust Fund

“The State of the Nation’s Housing 2007” from the Joint Center for Housing Studies of Harvard University

“The Housing Landscape for America’s Working Families, 2007” from the Center for Housing Policy

Affordable Housing Trust Fund

Housing and Economic Recovery Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Affordable Housing Trust Fund Act of 2007

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources