Washington, DC—Senate Majority Leader Harry Reid made the following statement today before voting for a housing bill that helps homeowners keep their homes, helps others buy new ones, and helps businesses and communities hurt by this crisis not only recover, but also create new jobs:
“The United States Senate will soon have the opportunity to vote for legislation that will help lift struggling homeowners, neighborhoods and our economy. This bipartisan housing bill – forged through compromise and cooperation on the part of Senator Dodd, Senator Shelby and others, is not perfect. It is not a magic bullet that will solve the problem. Either co-author would be the first to say that. But it is an important step.
“Experts now predict 3 million foreclosures in the next two years. Another 45 million homeowners will experience reduced value in their homes as a result of these foreclosures.
“Nevadans are facing the fallout of this crisis more than any other state. In February alone, one out of every 165 homes was in foreclosure. That’s the highest rate in America. Nevada’s economy is suffering, just as it is throughout America, and this bill will help begin to turn things around. If passed into law, the housing bill now before us would improve the prospects and options for families and communities all across our country.
“During our country’s last great banking crisis in the 1930s, the Federal Housing Administration (FHA) was created to stabilize the economy and help Americans secure the benefits of homeownership. Over the past three quarters of a century, millions of American families have become homeowners with the help of the FHA. But the rules that govern the FHA have limited the effectiveness of the program.
“Our housing bill addressing this problem by modernizing the FHA. One of the principle benefits will be to permanently raise loan limits to $550,000 and to introduce more flexibility into the lending process. President Bush has announced his support for FHA modernization. Democrats and Republicans in Congress agree that it is the right thing to do for American families. This bill will achieve that crucial and bipartisan goal.
“Among the many little-noticed consequences of the war in Iraq is that thousands of service men and women stationed overseas are struggling to meet their mortgage obligations. The sacrifice of our men and women in uniform is more than enough. They should not ever be forced to sacrifice their homes. Our housing bill will help avoid that terrible prospect. We extend for service members the protection period against foreclosure and make it easier for them to afford their mortgages. These are just some of the important provisions that this bill includes.
“But as I have said before, we must recognize that the upcoming vote is just the beginning of a process that begins here in the Senate and will continue in the House of Representatives. I hope that when the process is complete, we will have a strengthened bipartisan bill that will do even more to help families, communities and our economy.
“Today, the Administration announced a new program at the FHA that would insure new loans that refinance existing mortgages for homeowners who are ‘underwater,’ meaning that they owe more than their house is now worth. There are reports that nine million homeowners are now underwater. The Administration’s proposal is predicted to help just 100,000 of them.
“It is encouraging that President Bush is beginning to address the core of the crisis, but his proposal does not go far enough. Chairman Dodd and Congressman Barney Frank have been discussing a similar proposal for weeks that could help as many as two million.
“The importance of our work to help our country weather this crisis cannot be overstated. This week, the Washington Post reported that experts at the Federal Reserve have said this: ‘The nationwide drop in home prices could put the economy in uncharted territory, as there are no clear precedents for how consumers will respond.’ It is time for Congress to take action. Our vote today marks not the end, but the beginning, of that process.”