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Sen.
Salazar Continues Work to Fight Foreclosure and Housing Crisis
WASHINGTON, DC
– As the housing crisis continues to spread throughout Colorado
and America, home prices are on the decline and home sales have reached
record lows. Today, United States Senator Ken Salazar delivered a speech
on the floor of the Senate urging his colleagues to begin work on legislation
that would take meaningful steps to address the nation’s housing crisis.
Colorado was hit especially hard by the foreclosure crisis in its early
stages, and will continue to feel widespread negative effects in the
years to come. The Center for Responsible Lending projects that Colorado
will experience nearly 50,000 additional foreclosures in 2008 and 2009,
as adjustable-rate mortgages reset and as home values continue to plummet.
In addition to those 50,000 foreclosures, almost 750,000 homes – approximately
35 percent of all the homes in Colorado – will suffer declines in their
value.
This week Senate Democrats will move to reconsider the Foreclosure
Prevention Act of 2008, legislation that will keep families facing
foreclosure in their homes, help other families avoid foreclosures in
the future and help communities already harmed by foreclosure to recover.
Senate Republicans blocked an earlier attempt to debate the bill in
February.
Below is the speech Senator Salazar delivered on the floor of the Senate
today in support of moving to consideration of the bill:
“Mr. President, I rise today to once again urge my colleagues
to begin the very serious work that is needed to address the housing
crisis in America. The news keeps getting worse. Home prices continue
to decline steeply, home sales are reaching record lows, and the resulting
shock to our broader financial system keeps getting worse.
“In the two weeks since we adjourned, we saw the Federal Reserve act
to bail out a major investment bank by facilitating the purchase of
Bear Stearns by JP Morgan. This marked the first time in history that
the Fed had acted to rescue a financial institution of this kind, and
it did so because of the impact that Bear Stearns’ collapse would have
had on the broader economy.
“Just last week, it was reported that home prices in the twenty largest
metropolitan statistical areas suffered their largest year-over-year
drop in history – over ten percent. In some cities, such as Miami, Las
Vegas, and Phoenix, the drop was as high as 18 or 19 percent.
“And yet, because of a Republican filibuster, the Senate has failed
to act to deliver meaningful solutions to this crisis, which is at the
center of the economic storm that is pummeling middle-class America.
We last voted on the Foreclosure Prevention Act on February 28. In the
weeks since that vote, the bad news has gotten worse.
“Here are just a few headlines that have appeared in our nation’s largest
newspapers in the last month:
- In USA Today,
on March 26: “Battered Home Prices Keep Toppling.”
- In the New York
Times, on March 21: “Slump Moves from Wall St. to Main St.”
- In the Wall Street
Journal, on March 7: “Housing, Bank Troubles Deepen.”
- In the Washington
Post, also on March 7: “Mortgage Foreclosures Reach an All-Time High.”
“This is a scene
that is all too familiar in the communities across our states. All across
America, families are feeling the pain of the housing crunch. And it’s
not just the families who are being foreclosed upon. It is their neighbors,
whose home values have declined steeply as a result of foreclosures
in the neighborhood. As I noted earlier, it was reported last week that
home prices in the 20 major metropolitan areas declined over 10 percent
between January of 2007 and January of 2008.
“Price Reduced” – that is not a sign that any homeowner wants to see
on their lawn or their neighbors’ lawns. These are not just families
who found themselves in financial situations they could not afford to
climb out of, these are families who bought houses between 2002 and
2006, stayed current on their payments, and hoped to be able to see
the value of their homes continue to appreciate.
“But through no fault of their own, these families have seen their homes
– their single most valuable asset – decline precipitously in value.
The next chart demonstrates how widespread this problem has become in
my state of Colorado. These are figures from the Center for Responsible
Lending, which has projected what we can expect to see in terms of the
continuing tide of foreclosures over the next several years, and how
those foreclosures will affect homeowners everywhere.
“The Center for Responsible Lending projects that, in my state of Colorado,
we will experience nearly 50,000 additional foreclosures in 2008 and
2009, as adjustable-rate mortgages reset and as home values continue
to plummet. On top of that, the spillover effect of those 50,000 is
especially staggering. In addition to those 50,000 foreclosures, almost
750,000 homes – approximately 35% of all the homes in Colorado – will
suffer declines in their value.
“The total decrease in value is anticipated to be $3.2 billion – an
average decrease of $4,251. The situation is clearly getting worse.
Many middle-class families, whose budgets are already stretched thin,
cannot afford such a steep decline in the value of their most important
asset. Congress has a responsibility to act aggressively to help families
stay in their homes and to stem the tide of foreclosures that continues
to serve as a serious drag on our overall economy.
“That is why we are here again today working to pass the Foreclosure
Prevention Act of 2008, legislation introduced by Senator Harry Reid
that takes several important steps to provide meaningful and immediate
assistance to families and communities affected by foreclosures, and
to prevent other families and communities from finding themselves in
the same situation in the future.
“This legislation seeks to do three simple things. First, it seeks to
help families facing foreclosure to stay in their homes by expanding
states’ authority to issue tax-exempt mortgage revenue bonds, increasing
funding for credit counseling, and allowing bankruptcy judges to restructure
mortgages.
“Second, it provides critical help to communities across the country
that have been affected by foreclosure by increasing funding under the
Community Development Block Grant (CDBG) program to localities with
the highest foreclosure numbers and rates. It also targets tax relief
to businesses that have been affected by the recent economic downturn.
“Third, it takes steps to help families and communities avoid foreclosures
in the future by requiring simplicity and transparency on mortgage documents.
I am especially glad that three provisions in particular are included
in this package. The two tax-related provisions that were reported out
of the Finance Committee as part of our bipartisan economic stimulus
proposal represent important steps to provide low-interest loans to
homeowners seeking to refinance their mortgages, and to allow ailing
businesses – including those in the home construction industry – to
carry back their losses for a longer period of time to average out their
good and bad years.
“I also strongly support funding increases for credit counseling, which
will go a long way toward helping families understand the financial
burdens associated with taking out a long-term home loan and to avoid
foreclosure.
“In my state of Colorado, we have already seen how beneficial these
kinds of services can be. Last fall, a consortium of government, private-sector
and non-profit organizations launched the Colorado Foreclosure Hotline,
which connects borrowers with non-profit housing counselors who can
provide information on a borrower’s options when facing foreclosure.
Counselors can also act as facilitators for communication between lenders
and borrowers.
“The hotline has proven to be an enormous success. It fielded over 10,000
calls in the first six months following its launch, and continues to
receive about 75 calls a day. According to a recent report by the Colorado
Division of Housing, at least 4 out of 5 callers to the Colorado Foreclosure
Hotline who meet with housing counselors avoid foreclosure. I had the
opportunity to visit the organization that operates the Colorado Foreclosure
Hotline earlier this year. I was extremely impressed by the immediate,
meaningful impact this hotline has had on Colorado families facing the
specter of foreclosure.
“We need to pass the Foreclosure Prevention Act of 2008. Families need
our help. Communities need our help. And the economy needs our help.
We have an opportunity today to send a signal to our constituents that
we are serious about addressing this issue. I urge my colleagues to
seize that opportunity, and work together to pass this important bill.”
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