With 60,000 Virginia homeowners expeced to lose their homes to foreclosure over the next two years, most Virginia lawmakers supported a strong response to the housing crisis last week, with twin pieces of legislation designed to improve home values and assist those struggling to keep their primary residence.
Last week, the House of Representatives approved the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Neighborhood Stabilization Act of 2008, key pieces of legislation which were approved by the House Friday afternoon.
Owning a home is the American dream, said Rep. Jim Moran (D-8). But for over 60,000 homeowners in Virginia that dream is being swept away. Congress is taking action, crafting a responsible plan that protects communities and keeps people in their place of residence. Yet, President Bush has threatened to veto it. How in good conscience can he argue for billions to be sent to Iraq while denying homeowners relief? Sadly this is a hallmark of the administrations misplaced priorities and general neglect for the needs of the American people.
The housing crisis has had a significant impact in Virginia. One in 33 homeowners is projected to lose their home to foreclosure over the next two years, Moran said.
Homeowners who do not lose their homes are also hurt by the crisis through a decline in their homes value. The Pew Charitable Trusts estimates that 43% of all Virginia homeowners will feel the ripple effects of the housing crisis. The crisis could also cost the state and local tax base $6.95 billion.
The legiislation provides mortgage refinancing assistance to help keep families from losing their homes and protects neighboring home values. The plan also expands programs run by the Federal Housing Administration (FHA) that will allow borrowers in danger of losing their home to refinance into lower-cost government-insured mortgages they can afford to repay.
Moran cautioned that the plan is not a bailout. It requires both homeowners and lenders who agree to participate to take responsibility.
In order to qualify for refinancing and a new government backed mortgage, lenders and mortgage investors will be required to take a loss and borrowers must share any profit from the resale of the refinanced home with the government. Additionally, the new plan is open only to owner-occupied homes. Speculators, investors and vacation/second-home owners are not eligible.
The House also passed the Neighborhood Stabilization Act of 2008, which provides $15 billion in loans and grants to states to acquire vacant, foreclosed homes. The legislation will allow local communities to rehabilitate foreclosed properties, which currently drive down surrounding home properties, placing these homes back on the market.
Virtually no community has been untouched by the housing crisis, added Moran. Whether its the families who lost their homes or neighbors whose homes have lost significant value this comprehensive approach will go a long way towards ending this crisis and getting our economy back on track.