Congresswoman Diane E. Watson (D-33) sponsors a free Foreclosure Prevention Forum to discuss the impact of the economic downturn and how to survive this crisis. The forum will be held Saturday, May 31, 1 p.m. at Los Angeles High School, located at 4650 West Olympic Blvd.
Rep. Watson backed key legislation that will help improve home values and assist Americans who are struggling with the housing and credit crises and in danger of losing their homes. The American Housing Rescue and Foreclosure Prevention Act of 2008, and the Neighborhood Stabilization Act of 2008 were approved by the House with bipartisan support.
“Owning a home is the American Dream, but thousands of Californians are on the brink of losing their homes and becoming the next victims of the housing crisis,” said Watson. “I am proud that we have backed a plan that will help homeowners who are struggling and help end this crisis.”
The housing crisis has had a significant impact in California. One in 20 California homeowners is projected to lose their homes to foreclosure over the next two years. Homeowners who do not lose their homes have also been hurt by the crisis. The Pew Charitable Trusts estimates that 64% of all Californian homeowners will feel the ripple effects of the housing crisis. The crisis could also cost state and local tax base $107 billion.
The American Housing Rescue and Foreclosure Prevention Act of 2008 will provide mortgage refinancing assistance that 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) to enable 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 Rep. Watson. “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.”