By Staff
With high mortgage payments and the threat of foreclosure looming over the entire nation, many people have felt the anxiety of losing their home.
The flood of foreclosures is destroying dreams, sapping our economy of its strength and impacting home values.
Michigan, with the fifth-highest foreclosure rate in the nation as of this past June, has been hit especially hard with the seventh-highest foreclosure rate in the nation.
However, this landmark legislation will hopefully turn that tide and reverse those threats to America's well being.
Many constituents from across Michigan have written in the past few months describing their struggles to stay in their homes.
It's clear from their stories that the current housing problems are not merely about the high costs of mortgages or falling property values; the housing problems are about the people and families who are in danger of losing the places where they have lived, raised families and made memories.
Last month, Congress passed a bipartisan bill – the Housing and Economic Recovery Act of 2008 – to respond to the housing crisis.
Despite threatening to veto the legislation, President Bush also signed the act into law.
This housing legislation will remedy a number of the current ills that are hurting homeowners and provide some protection against a deeper, longer term crisis.
It authorizes the Federal Housing Administration (FHA) to insure $300 billion in mortgages, which will help an estimated 400,000 homeowners convert to 30-year fixed rate mortgages if they can meet strict criteria to demonstrate that while their credit rating is good, their current mortgage is unaffordable. There is a critical need for more affordable loan terms to be made available to help families refinance and stay in their current homes.
This measure will help homeowners avoid uprooting their families, and it will keep communities intact.
To protect neighborhoods from a glut of vacant homes, this bill makes funds available to communities to help rehabilitate blighted neighborhoods.
Michigan will receive a much-needed $170 million to help local communities, funds that can restore an estimated 6,000 properties and protect neighborhoods from the devaluation of their homes and the demoralizing effects of a community in decline.
For first-time homebuyers, the legislation makes available a $7,500 tax credit to encourage home purchases, enabling people to buy and sell homes despite difficult economic times.
This tax credit can help reduce the number of unsold homes, some of which have been sitting on the market for years.
To combat rising energy prices, the housing legislation includes provisions extending tax credits for energy-efficient homes and appliances. Although many of these provisions will have an immediate effect, this section of the legislation will help homeowners keep their energy costs under control.
To safeguard against the future issuance of unaffordable mortgages, the legislation includes enhanced disclosure requirements for mortgage-lenders. Mortgages that truly are "too good to be true," because the fine print includes spiraling interest rates and other confusing provisions, will be curtailed so that people are not misled into foreclosure.
Finally, the legislation includes major regulatory reforms for the housing government-sponsored enterprises, Fannie Mae and Freddie Mac, to prevent the disasters that unsound and deceptive business practices have produced.
Ending the foreclosure crisis will require a team effort among federal, state, and local governments, community and neighboring organizations, and lenders, brokers, and borrowers. This legislation we recently passed begins the effort. These measures will help lay the foundation for protection against future housing crises.
Together, we can keep struggling families in their homes and provide an opportunity to help restore our housing markets by keeping property values stable.
A number of commentators have labeled the Housing and Economic Recovery Act of 2008 as the most significant housing legislation in decades.
It is my hope that it can begin to stem the wave of foreclosures that is afflicting so many Michigan families.