Last week, my colleagues in the House of Representatives and I passed the most comprehensive response yet to the ongoing mortgage crisis. The American Housing Rescue and Foreclosure Prevention Act (H.R. 3221) responds directly to the crisis currently faced by middle-class Americans and provides financial authorities and the federal government the tools to prevent such a meltdown in the future.

U.S. families are expected to lose more than $2.6 trillion in housing wealth between 2007 and 2009. As home prices continue to fall, homeowners’ debt on their houses has exceeded the equity in their homes for the first time since 1945. I have heard from hundreds of constituents – many of whom are credit-worthy but cannot refinance – who are agonizing over this housing crisis. It is estimated that over 7,000 homeowners are losing their homes daily and an additional 40 million neighboring homeowners could see their property values decline as wealth is destroyed throughout entire communities.

H.R. 3221 combines a number of bipartisan proposals, including measures to modernize the Federal Housing Administration (FHA) and reform “government-sponsored enterprises” such as Fannie Mae and Freddie Mac. These reforms will provide crucial liquidity to our mortgage markets today and strengthen future regulation and oversight.

The housing package will help families facing foreclosure keep their homes, help other families avoid foreclosures in the future, and facilitate the recovery of communities damaged by the housing crisis. Generally, provisions include:

• establishment of an FHA program to refinance loans at risk of going into foreclosure;

• assistance for states to purchase, sell, and rent foreclosed homes to stop neighborhood values from plummeting;

• tax credits for first-time homebuyers;

• an expanded foreclosure grace period for veterans and personnel returning from active duty;

• and more reverse mortgage opportunities for seniors.

These measures will not fully solve any of our problems. Only time, during which home values can settle to their natural level, will allow us to move on. But this aggressive action will reduce the pain felt by ordinary Americans who have been unfairly harmed by a crisis rooted in the irresponsibility of a few borrowers and the greed of a few lenders.

If the most powerful banks in the world – some of whom were complicit in the trade of reckless and fraudulent mortgages – are to receive federal assistance, as they have, so should ordinary American homeowners who are just trying to make ends meet during a time of declining home values, rampant foreclosures, and rising prices at the store and the gas pump.

Editor’s Note: This post also ran on Rep. Johnson’s blog here.

This entry was posted on Tuesday, May 13th, 2008 at 1:37 pm and is filed under Politics, Economy/Budget .