Washington, DC— At a press conference today, Senate Democrats were joined by representatives of the mortgage and housing industries and consumer advocates to discuss the growing foreclosure crisis in America and efforts to help homeowners.
Senator Jack Reed (D-RI) said, “What began as a tremor in the sub prime mortgage market that affected a relative few, has sadly gained momentum, creating a broader credit crisis that continues to threaten the middle class and overall economic growth. Today the question is: how do we best limit the fallout, prevent more people from losing their homes, and prevent this situation from ever happening again? We must take a comprehensive, broad based approach that brings lenders, investors, and community groups together to help distressed homeowners and stabilize the economy.”
Senator Debbie Stabenow (D-MI) spoke of legislation that she has authored to help American families that cannot afford their mortgage payments. The Mortgage Relief Act would change current law that forces individuals to pay an income tax when they have sold their home for less than the outstanding mortgage and had the remaining balance forgiven. Currently, the IRS taxes any loan forgiveness as “income”. The bill would relieve families of a tax burden when their lender forgives part of the mortgage on a principal residence. “With more than 635,000 foreclosure notices being filed nationally in the last three months alone, middle class families across the country are hurting and being unfairly taxed by the IRS. I will continue to work with my colleagues to prevent additional, unfair economic hardships in the lives of those who find themselves in truly unfortunate circumstances,” said Stabenow.
National Association of Realtors President Pat Combs said, “Three years ago, America’s housing market was setting records for home sales and mortgage applications. Yet, just beneath the surface, problems in the sub prime market associated with poor underwriting, lax regulatory enforcement, and the proliferation of non-traditional mortgages, were waiting to explode.”
“More than 2.2 million families face the prospect of losing the roof over their heads during the next year. We must work quickly to find ways to help as many of them as possible avoid foreclosure and to ensure the lending practices that led to this mounting tragedy are stopped,” said Michael Calhoun, President of the Center for Responsible Lending. The rise in predatory lending practices has fueled the prevalence of sub prime mortgage loans and the growing crisis, especially in middle-class African-American and Latino communities.
Deborah L. Jones, President of the Detroit Alliance for Fair Banking said, “Foreclosure is an evil plague in our communities that came to steal, kill and destroy the dream of homeownership. Wayne County, Michigan, has the fifth highest foreclosure filings rate for metropolitan areas- equaling one filing for every 113 households. For many, the American Dream has died. Industry leaders, consumers and community groups must collaborate to address the crisis that is facing our communities. We must establish a solid solution to resurrect these dreams.”