Congress Inches Forward on Foreclosure Aid
Think the hullaballoo over foreclosures is overblown? Then its time to consider some sobering statistics from California.
Dataquick
this week that foreclosures in the Golden State soared to a high not seen in 15 years.
Meanwhile, in Washington, D.C., Democrats and Republicans are finding it hard to agree on how to help resolve the foreclosure crisis. On Wednesday, the House Financial Services committee took another small step forward to address the foreclosure crisis by passing
legislation
offering $15 billion in grants to help local communities buy foreclosed properties.
The House committed voted to pass the legislation -- part of a larger Democratic agenda to help on foreclosure -- 38 to 26. The ranking Republican member, Rep. Spencer Bachus of Alabama, opposes it. In his opening statement during the hearing, he said:
"Indeed, as FHA Commissioner Brian Montgomery stated in testimony before the committee on this legislation, 'it may have the unintended consequence of making foreclosure a more attractive option for lenders,' thereby compounding the very problem of rising foreclosures that the bill purports to address by accelerating the number of foreclosures."
Rep. Barney Frank (D., Mass.) denied the assertion. The bill includes provisions intended to avert abuse, including requiring proof that a home has been in the foreclosure process for 60 days. Furthermore, the money would be made available to government entities and not-for-profit groups. The money would be directed to areas hardest hit by the foreclosure crisis and come in the form of both grants and loans.
The future of the legislation remains unclear; a version of the bill will be heard in a Senate committee May 6. The problem has been getting all sides to agree. Democrats want to see more aggressive action, while both the president and Republicans advocate caution on government involvement. Both houses of Congress have passed competing legislation on housing. For example, the House and Senate have passed differing versions of legislation to modernize the Federal Housing Administration (FHA) in 2007 but can't manage to agree on a compromise.
The FHA was founded during the Great Depression in an effort to stabilize the housing market by regulating the mortgage industry. The present housing market has dropped precipitously in value -- on an order not seen since the Depression. On Thursday, the same House panel considered providing new money -- up to $300 million -- to the FHA in order purchase foreclosed homes.
More bad news hit the
. The Census Bureau announced lower-than-expected new home sales, which reached levels not seen in 17 years. Those numbers equal the last recession felt in the housing market in 1991, and it appears we again find ourselves in a recession for home prices.
The pain continues outside of Washington, while legislators barely inch closer finding some resolution for struggling homeowners.