House Approves Major Bills to Address Housing Crisis

May 8, 2008 Issues: Housing

(Washington D.C.)-  In response to the nationwide economic downturn caused by the housing and credit crisis, the House of Representatives today approved major legislation to combat the unprecedented rise in foreclosures by helping struggling homeowners refinance their mortgages, encourage the purchase of homes to revive the housing market and address the negative impact of rising foreclosure rates on communities and the overall economy. 

“The housing crisis is central to the economic turmoil we are now facing,” said Rep. Levin.  “Congress must come to the aid of struggling homeowners, not just the financial markets.  This legislation is particularly beneficial to Southeast Michigan, where foreclosure rates have been among the highest in the nation.”

According to RealtyTrac, Inc., Macomb and Oakland Counties’ foreclosure rates are currently third and sixth highest among all counties in Michigan, with Wayne County’s rate the highest.  All three counties’ rates are in the top 5% among all counties in the nation.  In 2007, the Detroit-area had the highest foreclosure rate in the United States.  RealtyTrac announced last week that nationwide foreclosure filings in the first quarter of 2008 are more than double what they were last year.

One central piece of the approved legislation is a provision orginally co-sponsored by Rep. Levin that would allow the Federal Housing Administration to insure up to $300 billion in new loans to help borrowers at risk of foreclosure refinance into viable mortgages.  Another bill would provide $15 billion in loans and grants to state and local governments to purchase foreclosed homes to help communities alleviate the many problems associated with rising foreclosures.

“I met with mayors and city managers of Macomb and Oakland County communities a few weeks ago, and they expressed an overwhelming need for federal action to alleviate this crisis,” said Rep. Levin.  “Foreclosures not only affect those that lose their homes, they bring surrounding home values down for everyone.  Foreclosures and vacant homes in neighborhoods also drive crime up, reduce revenue for local governments and school districts and have a detrimental impact on the overall economy.  The need for action to address this crisis could not be more critical.” 

Also approved today was a package of housing tax provisions, including:

• A tax credit to help first-time homebuyers make a down payment on a home, encouraging home purchases
• A deduction of property taxes up to $350 ($700 for married couples) for tax payers taking the standard deduction
• A temporary increase in the low-income housing tax credit to help create new options for families seeking affordable housing alternatives
• A provision authored by Rep. Levin to allow Federal Home Loan Banks to guarantee tax-exempt bonds, reducing municipalities’ borrowing costs for public projects including road repairs or school and hospital expansions
• An additional $10 billion in mortgage revenue bonding authority for 2008 to allow states to help struggling homeowners refinance their mortgages