07.26.08

On Final Passage Of The Housing And Economic Recovery Act Senate Floor

Mr. LEAHY. Mr. President, the sluggish national economy and the rising cost of housing is a one-two punch that is keeping affordable housing out of the reach of too many Vermont families. It is important that during these times of economic hardship we do more--not less--to help struggling families make ends meet. I am pleased that today, after months of delay, the Senate is set to act on final passage of the Housing and Economic Recovery Act, H.R. 3221, a responsible bill to strengthen our economy, restore confidence in our financial markets, and provide urgently needed relief to American families who are struggling to make ends meet. 

Under the Bush administration's watch, unregulated mortgage originators were given financial incentives to sell risky, unaffordable, subprime mortgages to vulnerable borrowers. As these adjustable rate mortgages reset to higher rates, the number of families unable to afford their payments and threatened with foreclosure is skyrocketing. 

Foreclosures have climbed in my home State of Vermont and, while subprime mortgages are not the largest driver, the mortgage foreclosure crisis will still have severe costs for homeowners, not only in direct costs but in its effect on home values and declining property taxes. According to the State of Vermont Department of Banking, Insurance, Securities and Health Care Administration, for the first quarter of 2008, well over 400 new foreclosures have been filed in Vermont, which is a 30-percent increase over those filed in last year's first quarter. If the current trend holds, Vermont is facing about 1600 this year. 

Several urgent housing-related issues have become prominent already this year. The most visible issue is the prevalence of subprime loans and growing mortgage default and foreclosure rates, affecting an estimated 2 million homeowners. Congress has responded with a reform package to change the way in which the lending and home-buying industry is regulated and to assist borrowers who are facing default and foreclosure. These proposals address several of the problems spawned by a housing foreclosure crisis that has threatened America's hard-working families, their communities, and our local and national economies. 

I recognize that this bill is not a perfect solution. However, I also believe the housing crisis and market instability demand action. Ending the foreclosure crisis is vital to the American economic recovery. This package will help prevent another crisis of this magnitude, stop foreclosures before they begin, and preserve for future generations the American dream of home ownership. 

Homes that have been foreclosed upon and are sitting unoccupied lead to declines in neighboring house values, increased crime, and significant disinvestment. To ensure that communities can mitigate these harmful effects of foreclosures, the package provides $3.92 billion to communities hit hard by foreclosures and delinquencies. These supplemental community development block grant, or CDBG, funds will be used to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in house values of neighboring homes. 
It has always been a priority of mine to help make housing more affordable, and I have worked over the years--as I will do in years to come--to bring the resources into Vermont to make that happen.

That is why I worked with Senators Sanders, Baucus, Snowe, Thune, and Whitehouse to successfully include a provision that applies an all-State minimum of 0.50 percent to the supplemental CDBG funds provided to States to buy up and rehabilitate foreclosed properties to ensure smaller States like Vermont receive a portion of the help. This will result in roughly $20 million coming to Vermont to help with foreclosures in our communities. 

Now that the President has lifted his veto threat and after months of delay tactics by the minority, the Senate is ready to pass a responsible bill to address the worsening foreclosure crisis, which is the root of the broader economic crisis. By helping Americans keep their homes and their home equity, we are restoring stability to the housing market and helping businesses and communities hurt by this crisis not only recover, but also create new jobs. The Housing and Economic Recovery Act will help prevent another crisis of this magnitude, stop foreclosures before they begin, and preserve home ownership for future generations. 

Each day this bill has been stalled, nearly 8,500 new families filed for foreclosure--on top of already accelerating foreclosure filings that were 53 percent higher in June than in the same month last year. The time for delay has passed. It is about time that we send this bill to the President for his signature into law so we may begin to deliver solutions that are in the best interest of the American taxpayer and the U.S. economy.

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