Senate Democrats

Senate Democrats Push Housing Stimulus Measure to Aid Struggling Families

Today, Senate Democrats will once again attempt to pass legislation to help struggling homeowners stay in their homes. The Foreclosure Prevention Act targets families most in need by keeping families facing foreclosure in their homes; helping families avoid foreclosures in the future; and helping communities already harmed by foreclosure to recover.  Last month, Bush Republicans blocked Democratic efforts to debate this important measure. Today, those very same Republican Senators have a chance to address the concerns of their constituents.

Highlights of the Senate Housing Bill:

  • The Senate Housing Measure Allows Bankruptcy Judges to Modify the Mortgage of Debtor’s Principal Residences.  The measure eliminates a provision in the bankruptcy law prohibiting modifications to mortgage loans on the debtor’s principal residence for homeowners who meet strict income and expense criteria.  With this change, primary mortgages are treated the same as vacation homes and family farms. According to the Center for Responsible Lending, by allowing judges to modify harmful mortgages marketed by subprime lenders, more than 600,000 families could keep their homes. [S. 2636, 2008; Center for Responsible Lending, 2/27/08]
  • The Bankruptcy Provision Is Narrowly Tailored and Would Cost the Treasury Nothing. The measure only applies to two categories of loans that federal regulators have determined to be potentially dangerous given recent poor underwriting by many lenders: 1)subprime, and 2)Non-traditional loans (i.e. interest-only loans and payment option ARMs). Conventional fixed-rate or adjustable-rate loans are not eligible. [Center for Responsible Lending, 2/27/08]
  • The Senate Housing Measure Provides Options for Families to Refinance Bad Loans. The Senate bill provides an extra $10 billion of tax-exempt, private-activity bond authority that could be used to refinance subprime loans or provide mortgages for first-time home buyers. [S. 2636, 2008; CQ Weekly, 3/3/08]
  • The Senate Housing Measure Increases Funding for Counseling For Families At Risk of Foreclosure. The measure provides additional funding for housing counselors so they may reach out to families at risk of foreclosure. [S. 2636, 2008]
  • The Senate Housing Measure Provides Funding For The Purchase and Rehabilitation of Foreclosed Properties. The measure provides $4 Billion in community block grant funds to assist state and local governments to use toward purchasing foreclosed properties in regions of the country hit hardest by the housing crises. The funds would go to the rehabilitation of homes in order for them to be rented or resold. [S. 2636, 2008]

Action on this legislation is crucial in the face of troubling economic uncertainty:

New Home Sales Fell in February For the Fourth Straight Month. While the rate of decline has slowed, the worst slump in more than two decades has not run its course, analysts said. The 1.8 percent drop sent the annual sales rate down to 590,000 units in February, the Commerce Department reported Wednesday. That was the slowest pace since February 1995 and down 57.5 percent from the sales peak of 1.389 million units in July 2005. The median price of a home sold last month dropped to $244,100, 2.7 percent less than the level of a year ago. [Associated Press, 3/26/08]

  • January Existing Home Sales Fell for 6th Straight Month. “Sales of existing homes fell for the sixth straight month in January, dropping to the slowest sales pace on record. Median home prices were also down and many analysts predicted further price declines in the months ahead given high levels of unsold homes. The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace, going back to 1999, and was seen as evidence that the steepest slump in housing in a quarter-century has yet to hit bottom.” [Associated Press, 2/25/08]

Home Prices Fell By The Most on Record in 20 Metropolitan Areas In January. “Home prices in 20 U.S. metropolitan areas fell in January by the most on record, a sign the housing recession is deepening, a private survey also showed today. The S&P/Case-Shiller home-price index dropped 10.7 percent from January 2007, after a 9 percent decrease in December. The gauge has fallen for 13 consecutive months.” [Bloomberg, 3/25/08

January Housing Starts Remained at The Lowest Level Since 1991. “Housing starts for single-family units remained at their lowest level since 1991 in January, according to data released Thursday morning by the Commerce Department. Starts registered a seasonally-adjusted rate of 1.012 million to start 2008, 0.8 percent above December’s revised 1.004 million rate but 27.9 percent of of January 2007’s pace. December’s starts were revised downward from the originally reported 1.006 million last month.” [HousingWire, 2/20/08

  • Single-Family Housing Starts Sank To A 17-Year Low. “With no end in sight to the housing bust, new construction on single-family homes dropped by 6.7% in February to a seasonally adjusted annual rate of 707,000, the lowest in 17 years, the Commerce Department reported Tuesday. Starts of single-family homes have plunged 62% since the peak two years ago.” [MarketWatch, 3/18/08]