Rep. Lois Capps, D-Santa Barbara, voted Wednesday for the American Housing Rescue and Foreclosure Prevention Act of 2008 (House Resolution 3221), legislation to provide relief to homeowners and communities harmed by the ongoing foreclosure crisis.
The bill also contains legislation to meet the huge challenges confronting Fannie Mae and Freddie Mac and to institute reforms to prevent future crises. The bill passed the House by a vote of 272-152 and will be sent back to the Senate for final passage before being sent to President Bush, who is expected to sign it.
The following is the Rep. Capps’ statement:
Madam Speaker, I rise today in strong support of H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act.
This bill is a powerful response to the foreclosure crisis that has spread across the nation. The recent troubles at Fannie Mae and Freddie Mac have shaken the economy and the bill seeks to stabilize them by extending them limited credit and other financial support from the U.S. Treasury. These institutions are the central nervous system of mortgage liquidity in the United States, and ensuring their continued operations is vital to avoiding even more calamity in our housing markets. To help avert future mortgage crises, the bill creates a new, strong regulator for Fannie Mae and Freddie Mac.
The bill also includes much-needed reforms of the Federal Housing Administration. The changes will help protect lower income borrowers from unscrupulous lending practices that have plagued the subprime market. And the bill provides more funding for housing counseling to help consumers avoid costly mistakes and learn more about the housing market.
Madam Speaker, this calamity isn’t confined to financial institutions; it has also spread through our towns and neighborhoods and affected millions of our neighbors. In California, foreclosures have risen to a 20-year high and we are feeling this pain on the Central and South Coast. That’s why I’m glad the American Housing Rescue and Foreclosure Prevention Act provides several key provisions to help homeowners.
For example, this bill permanently increases the conforming loan limits to $625,000. Median home prices in Ventura, Santa Barbara and San Luis Obispo counties are well above the national average, and our families continue struggling to obtain affordable housing. This provision will allow them to obtain financing at lower interest rates, while at the same time providing much needed liquidity to our local housing market. While I believe the limit should have been raised to $729,750, as was temporarily done earlier this year, this permanent increase to $625,000 is absolutely crucial for my district. I am hopeful that in the future we will continue our efforts to raise this limit so that it reflects the housing needs of my constituents.
In addition, this bill will stem foreclosures by creating a voluntary mortgage refinancing program that allows families to stay in their homes. Under this program, the Federal Housing Administration will have the authority to refinance up to $300 billion in imperiled mortgages. For borrowers facing escalating mortgage payments or even foreclosure, this provision allows them to refinance their homes into more affordable, fixed-rate mortgages. To protect taxpayers, borrowers will have to agree to certain conditions regarding future sale of the home in order to participate in the program. And to ensure against the risk of taxpayers being saddled with overvalued loans, lenders holding these troubled mortgages will have to write down the loans significantly.
Too many hard working families have found themselves the victim of unscrupulous lenders and watched helplessly as their piece of the American Dream has been snatched away from them. Even more tragically, many homeowners who have had no problem keeping up with their mortgages have seen their home values and quality of life harmed by the appearance of abandoned foreclosed properties in their neighborhoods. That is why the House went against the wishes of the President and included $3.9 billion for cities and towns to purchase and rehabilitate foreclosed homes. Abandoned properties can hurt entire communities and this money will prove vital in protecting against neighborhood decline during this crisis.
The bill also creates a $500 million affordable housing trust fund to expand the housing options available for low-income working families and creates a first-time homebuyer tax credit worth up to $7,500. These two provisions will undoubtedly help young families in my district better afford the costs of buying a new home.
Madam Speaker, the hardworking families in our country need help. The House passed a very similar bill in May, which the president threatened to veto. Now that the housing and finance situation has continued to deteriorate, he has agreed to work with us in helping the American people. I say it’s about time, and I hope that we have his continued cooperation as the many provisions of this legislation are carried out in our hometowns.
I urge my colleagues to support this bill.
Emily Kryder is press secretary for Rep. Lois Capps, D-Santa Barbara.