Nearly 50,000 Colorado Homeowners Could Lose Home to Foreclosure
May 8, 2008
U.S. Rep. Ed Perlmutter today responded to stem the tide of the current housing crisis and backed key legislation to help assist Americans who are in danger of losing their homes and stabilize the economy by keeping liquidity in the markets. The American Housing Rescue and Foreclosure Prevention Act of 2008, and the Neighborhood Stabilization Act of 2008 were approved today by the House with bipartisan support.
“This legislation strikes a balance between free enterprise and regulation, which is what needs to happen for our system to work,” stated Perlmutter. “I am proud to back this legislation to help homeowners stay in their homes and keep making payments, which will help ease the credit crisis faced by our markets.”
The housing crisis has had a significant impact in Colorado. Nearly 50,000 homeowners could lose their homes to foreclosure over the next two years in our state. Homeowners who do not lose their homes have also been hurt by the crisis. The Pew Charitable Trusts estimates that nearly 750,000 of all Colorado homeowners will feel the ripple effects of the housing crisis by declining home values. The crisis could also cost state and local tax base $3.2 billion in lost property value.
The American Housing Rescue and Foreclosure Prevention Act of 2008 will provide mortgage refinancing assistance, which will help keep families from losing their homes and protect 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.
The plan is not a bailout and requires both homeowners and lenders to take responsibility. In order to qualify for refinancing and a new government backed mortgages, lenders and mortgage investors will be required to take a loss and borrowers must share any profit from the resale of a 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, and place these homes back on the market.
“The housing crisis is impacting all of us,” added Perlmutter. “Families who lose their homes are directly impacted, but their former neighbors have also seen their homes lose value. Our comprehensive approach will help end this crisis and get our economy back on track.”
