Legislation Will Help Prevent Foreclosures
Washington , DC – Congresswoman Carol Shea-Porter today voted for two bills that would help Americans who are in danger of losing their homes. This legislation passed the House of Representatives with bipartisan support.
The sub-prime mortgage crisis and the deflation of the housing bubble have pushed many American families into foreclosure. As housing prices drop, some homeowners find that their outstanding mortgage exceeds the value of their home. This prevents them from refinancing if they become unable to make monthly mortgage payments, effectively forcing them into foreclosure.
“Millions of Americans are struggling to keep their family homes and they need help now,” said Shea-Porter. “It is critical for Congress to act.”
The housing crisis is thought to be a major contributor to the current economic slowdown. Many families have less money to spend, so businesses feel the pinch. When a home goes into foreclosure, it can affect the value of other homes in the neighborhood.
“Most people think that it won’t happen to them, or that they won’t be affected,” said Shea-Porter. “But what happens to one or two families can drive down home values in a neighborhood or community. It is in our own best interest to see that our neighbors get help.”
Although the problem is less severe in New Hampshire than in some other parts of the country, foreclosures have doubled since the same time last year. A recent study by the Pew Charitable Trusts estimates that 1 in 49 New Hampshire families will face foreclosure during the next two years. The study predicts that almost 20% of New Hampshire homeowners will feel ripple effects from the foreclosures. According to the authors, more than 57,000 New Hampshire homeowners will see the value of their homes drop an average of $3,500.
The legislation passed by the House requires homeowners and lenders to share responsibility. The American Housing Rescue and Foreclosure Prevention Act of 2008 (H.R. 3221), provides government backing for refinanced mortgages, forcing borrowers and lenders to shoulder part of the loss incurred from the decrease in the value of the home. If the home later increases in value, borrowers must share the profit with the government.
The bill would also give first-time home buyers a tax benefit equivalent to a tax-free loan of up to $7,500. In addition, the legislation includes a provision so that existing homeowners can take an additional deduction for property taxes up to $700. Congresswoman Shea-Porter had already introduced a similar provision in her original bill, the Middle Class Assistance Act (H.R. 5691).
“ New Hampshire middle-class taxpayers really need a break,” said Shea-Porter. “That’s why I introduced legislation to create a property tax deduction. People in New Hampshire will be very happy to know that a similar provision is in the bill that passed the House of Representatives today.”
The House also passed the Neighborhood Stabilization Act of 2008 (H.R. 5818), which provides $15 billion in loans and grants to states so they can purchase foreclosed homes, helping to prevent one foreclosed home from causing decreased values in other neighborhood homes, and thus affecting an entire community.
1 in 33 Homeowners Projected To Be In Foreclosure Within The Next Two Years
The Pew Charitable Trusts
Assessment of the Effect of the Foreclosure Crisis in New Hampshire
The Pew Charitable Trusts