By Mark Huffman
ConsumerAffairs.com
February 28, 2008
The U.S. Senate will attempt to override President Bush's expected veto of the Foreclosure Prevention Act. Senate Majority Leader Harry Reid (D-NV) says he will try to gather the 60 votes needed to make the sweeping changes to foreclosure rules law.
"Every day, new statistics illuminate the depth of this growing crisis," said on the floor of the Senate. "Just yesterday, the Associated Press reported that the number of homes facing foreclosure across our country jumped 57 percent in January, compared to a year ago.
"We also now know that sales prices lost 9 percent in the final quarter of 2007, marking the steepest drop in the 20 year history of the Standard and Poor's housing index," Reid said.
Reid says he has seen the problem up close in his home state. Nevada has one of the highest foreclosure rates in the nation. Reid says foreclosures are up 96 percent in the last 12 months, with a 600 percent surge in the Reno area.
Reid says families who lose their homes to foreclosure aren't the only victims.
"Those who live near foreclosures families who have done nothing wrong and pay their bills on time are seeing the values of their property sapped," he said. "The Center for Responsible Lending has estimated that 40 million neighboring homes will experience a loss in equity if the expected foreclosures materialize. That could lead to a total decline of more than $200 billion in home equity. This could mean more than $3 billion in loss for Nevada alone."
The Foreclosure Prevention Act would empower judges to restructure problem mortgages, and even allow some homeowners out of subprime mortgages. The White House has threatened a veto, saying it amounts to a costly bailout for lenders and speculators.
The White House on Tuesday threatened to veto the bill, which is the latest Congressional response to the subprime mortgage crisis that threatens to tip the economy into recession and push many Americans out of their homes.
The measure would let bankruptcy judges erase some mortgage debt and provide billions of dollars to rehabilitate abandoned properties. The White House said the bill was too costly and an unacceptable bailout for lenders and speculators.
"We are not trying to help speculators who lost a bet." Reid countered. "We are not trying to bail out lenders who underwrote mortgages that should not have been made. We are not trying to bail out borrowers who should have known better."
Reid said the Bush Administration deserves credit for taking some first steps, but said they don't go far enough to address the problem, and help too few people.
