By U.S. Senator Benjamin L. Cardin (D-Md.)
American families are hurting as our nation faces a growing crisis in the housing and credit markets. The economic news continues to worsen as we hear reports about the highest foreclosure rate in years, declining housing values, lost property tax revenues and a credit crunch that is making it very difficult for middle-class families to find affordable mortgages.
It is estimated that more than 2.2 million Americans who took out subprime mortgages between 1998 and 2006 are in jeopardy of losing their homes during the next two to three years. The National Realtors Association recently reported that home sales have dropped for the sixth consecutive month and that home prices are down 4.6% from a year ago. In Maryland, there has been a 39% increase in foreclosures in the last quarter.
Unfortunately, the bankruptcy laws have made it very difficult for many families. Current law allows bankruptcy judges to restructure mortgages on a vacation home, but not on a primary residence to help avoid foreclosure. This makes little sense and it needs to change.
We need to stimulate the housing industry and make it possible for more Americans to realize the American Dream of homeownership. I will be introducing the First-time Homebuyers’ Tax Credit Act to provide a refundable income tax credit for the purchase of a principal residence by first-time homebuyers. The credit is expected to apply to individuals and couples and could be used for down payment or closing costs. It also would be targeted to ensure the stimulus reaches purchasers for whom a credit would most help.
I also have co-sponsored the Foreclosure Prevention Act, S. 2636, which would amend the bankruptcy law to allow the modification of nontraditional and subprime mortgages on primary residences. It also would provide $200 million in pre-foreclosure counseling funds, allow housing finance agencies to issue bonds for refinancing and provide block grants to communities harmed by foreclosure so property values do not decline further.
Unfortunately, the Senate has not moved this bill forward because of objections from some Republicans to the bankruptcy provision. I’m hopeful we can reach an agreement and bring this bill back to the floor for passage.
In the interim, if you are having trouble paying you mortgage or think you might soon, I urge you to get help now. Don’t wait. Call the Maryland foreclosure hotline toll-free at 1-877-462-7555 or go to their website: http://www.MDHOPE.org/