Home mortgage deduction

Emergency Economic Stabilization Act of 2008

hmoroz — Fri, 03 Oct 2008 17:44:58 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Amount authorized for the Treasury Secretary to use to buy troubled assets: $700 billion

GDP (PPP) of Taiwan in 2007: $695.4 billion

Percentage increase in foreclosure filings from August of 2007 to August of 2008: 27

Likelihood that a U.S. household received a foreclosure filing during August of 2008: 1/416

Number of foreclosures expected to occur in late 2008 and throughout 2009: 2,164,000

Estimated number of foreclosures that the mortgage restructuring provision for primary residences, not included in this legislation, would prevent: 600,000

Decrease in home values caused by nearby subprime foreclosures in late 2008 and throughout 2009: $352 billion

Overview/Summary

Middle Class Position Analysis

Middle Class Opposes. Middle-class Americans, no matter how far removed from Wall Street, will be adversely affected by the crisis in finance and credit that now grips our economy. After a prolonged period of stagnant wages and economic growth that benefited primarily the wealthiest, middle-class Americans rely heavily on credit to purchase everyday necessities, pay medical bills, and fund college educations. Epic stock market declines have eaten away at the retirement savings of senior citizens who have no other source of income. If the government does not act to make more credit available, credit for the loans that finance payrolls and state and local government operations will dry up, increasing unemployment. Government action is absolutely necessary to ensure that middle-class Americans’ standard of living does not suffer gravely from the credit crisis.

Yet, the Emergency Economic Stabilization Act of 2008 is not the action middle-class Americans need. Instead of a top-down bailout, credit markets should be stabilized from the bottom up. To the extent that a direct investment in the financial services industry is made, it should fully complement large-scale mortgage restructuring and foreclosure prevention efforts and the re-regulation of the financial services industry. This would not only benefit struggling homeowners, but is widely understood to be part of an effective strategy to aid financial markets through stabilized payment streams.

The nation’s first priority should be to repair the damage done to the housing market and to the lives of working- and middle-class Americans.

Any proposed remedy for the financial crisis must begin with assistance for struggling homeowners. This should come in the form of a longer-term, government-led commitment to reshape the mortgage landscape of this country. One promising model is the Home Owners’ Loan Corporation (HOLC). Originally established during the New Deal, HOLC made more than 1 million loans to refinance mortgages in distress, which constituted a fifth of all mortgage loans. At present, this would represent about 10 million loans, with the total value of mortgages held by HOLC in 1937 approximately equivalent to the total of all subprime mortgage loans. HOLC helped about 80% of homeowners who refinanced stay in their homes.
Bankruptcy protection for primary residences is critical. This measure would allow bankruptcy judges to rewrite mortgages on first homes (as is now possible for second homes and yachts) on terms struggling homeowners could afford. The change could prevent as many as 600,000 foreclosures.
A moratorium on foreclosures would provide an immediate opportunity for homeowners to work out loan modifications with lenders.

The financial crisis is serious and will affect the lives of middle-class Americans immediately and significantly. At the same time, only financial rescue legislation that includes significant assistance for homeowners can initiate a full, long-term recovery from the current crisis.

Despite the inclusion of several special-interest tax breaks in the Act, the tax changes added to the legislation are generally very important to the middle-class. The energy tax credit expansions and extensions are part of a long-term strategy to alleviate high gas and heating costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Changes to the child tax credit would make 2.9 million additional children eligible for the benefit and would increase the benefit for 10.1 million more. Temporarily raising the Alternative Minimum Tax exemption ensures that middle-class Americans are not overwhelmed by a tax that they were never intended to pay.

Finally, the mental health and “substance use disorder” parity provisions of the Act not only do much to remedy the discriminatory practices of insurers, but will increase access to mental health care services for middle-class Americans already struggling with high health care costs.

While these last-minute additions to the bailout package are positive for the middle class and should become law, they are not relevant to this bill and should be enacted separately. Ultimately, these provisions do not outweigh the substantial shortcomings of the financial bailout.

Quotes from Experts

Beyond this Bill

Additional Resources

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Center for Responsible Lending on Court-Supervised Loan Modifications

A History of the Home Owners’ Loan Corporation from the Center for American Progress

Emergency Economic Stabilization Act of 2008

hmoroz — Fri, 03 Oct 2008 17:44:58 -0400

Legislation

The middle class

Opposes

Video Summary

Injustice Facts

Amount authorized for the Treasury Secretary to use to buy troubled assets: $700 billion

GDP (PPP) of Taiwan in 2007: $695.4 billion

Percentage increase in foreclosure filings from August of 2007 to August of 2008: 27

Likelihood that a U.S. household received a foreclosure filing during August of 2008: 1/416

Number of foreclosures expected to occur in late 2008 and throughout 2009: 2,164,000

Estimated number of foreclosures that the mortgage restructuring provision for primary residences, not included in this legislation, would prevent: 600,000

Decrease in home values caused by nearby subprime foreclosures in late 2008 and throughout 2009: $352 billion

Overview/Summary

Middle Class Position Analysis

The nation’s first priority should be to repair the damage done to the housing market and to the lives of working- and middle-class Americans.

Any proposed remedy for the financial crisis must begin with assistance for struggling homeowners. This should come in the form of a longer-term, government-led commitment to reshape the mortgage landscape of this country. One promising model is the Home Owners’ Loan Corporation (HOLC). Originally established during the New Deal, HOLC made more than 1 million loans to refinance mortgages in distress, which constituted a fifth of all mortgage loans. At present, this would represent about 10 million loans, with the total value of mortgages held by HOLC in 1937 approximately equivalent to the total of all subprime mortgage loans. HOLC helped about 80% of homeowners who refinanced stay in their homes.
Bankruptcy protection for primary residences is critical. This measure would allow bankruptcy judges to rewrite mortgages on first homes (as is now possible for second homes and yachts) on terms struggling homeowners could afford. The change could prevent as many as 600,000 foreclosures.
A moratorium on foreclosures would provide an immediate opportunity for homeowners to work out loan modifications with lenders.

Quotes from Experts

Beyond this Bill

Additional Resources

Harvard Law Professor Elizabeth Warren on Bankruptcy Reform and the Housing Crisis

Center for Responsible Lending on Court-Supervised Loan Modifications

A History of the Home Owners’ Loan Corporation from the Center for American Progress

Home mortgage deduction

Emergency Economic Stabilization 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

Emergency Economic Stabilization 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