House Passes Bills to Address Subprime Loan Crisis
Friday, May 16, 2008 at 9:22 am
One in 33 homeowners will face foreclosure in the next two years because of subprime loans made in 2005 and 2006, according to a study released in April by the Pew Charitable Trusts. And the news gets worse: In Colorado, one in 25 homeowners will find themselves in forclosure during the same time period, according to the study.
U.S. Rep. Ed Perlmutter, D-Golden, is pushing for two bills addressing the foreclosure crisis: the American Housing Rescue and Foreclosure Prevention Act of 2008, and the Neighborhood Stabilization Act of 2008, which were passed by the House last week.
“I’ve heard from so many constituents impacted by foreclosures, declining home values and tough economic times,” Perlmutter said in a statement. “This legislation strikes a balance between free enterprise and regulation, which is what needs to happen for our system to work.”
Almost 50,000 Colorado homeowners will face foreclosure over the next two years, according to Leslie Oliver, Perlmutter’s spokeswoman. The areas of the state with the highest rates of foreclosure currently are Adams and Arapahoe counties, she added.
Also, according to the Pew study, 51 percent of homeowners will be affected, with an average $4,251 loss of property value; $3.2 billion is projected to be lost in state and local tax revenue.
The American Housing Rescue and Foreclosure Prevention Act of 2008 would provide mortgage refinancing assistance for borrowers willing to take a loss and share any future profits from the resale of their home with the government. The Neighborhood Stabilization Act of 2008, which provides $15 billion in loans and grants to local communities to rehabilitate foreclosed properties, is an attempt to offset the negative effects a foreclosure can have on an entire neighborhood. The two acts must still make their way through the Senate and be signed by the president to become law.