The crisis of rising mortgage foreclosures affects not just homeowners, but also neighboring homeowners and communities, lenders and the economy as a whole. Projections show that 1.7 million people nationally could lose their homes this year and next, nearly double the number of foreclosures during the last two years. Subprime mortgages have soared in recent years, with 3 million new subprime loans in 2005 and 2006, and have triggered this national foreclosure crisis. Democrats are committed to acting quickly to rein in subprime loans, increase the availability of stable, affordable home loans and keep families in their homes.
Democrats’ three part action plan:
Reform the Federal Housing Authority. Democrats are committed to reforming the Federal Housing Authority (FHA) to allow it to make more home loans and expand homeownership. By adjusting FHA’s loan limits, eliminating the cap on the number of reverse mortgages FHA can insure, and simplifying the FHA’s downpayment requirement, the FHA can reach more underserved borrowers and ensure access to stable, affordable home loans.
Increase Funding for On The Ground Assistance and Counseling for Borrowers. Democrats will press the Bush Administration support Congressional efforts to increase funding for HUD-approved non-profits that are on the ground helping homeowners to stave off foreclosures. The Senate Transportation-HUD appropriations bill included $200 million for these organizations, but more is needed. These non-profits have been inundated with borrowers, whose loans have reset to higher monthly payments, and need assistance to refinance with the lender that holds their mortgage. Through negotiation and counseling from on the ground experts, families can remain in their homes, staving off the high costs of foreclosure.
Urge President Bush to Appoint a Principle Federal Official to Oversee and Coordinate Federal Efforts to Aid Families Affected by Subprime Loans. Democrats will call on the President to appoint a principal federal official to oversee and coordinate federal efforts to aid families in homes affected by subprime loans. The track record of federal banking regulators shows a reluctance to focus on this issue. This official could harness the disparate arms of the federal government, ensure a coordinated response and should work with Fannie May and Freddie Mac to provide the liquidity necessary to stave off this crisis.