In an effort to address the housing crisis that has plagued Colorado and our nation, today United States Senator Ken Salazar supported Senate passage (84-12) of The Foreclosure Prevention Act of 2008. This legislation aims to stabilize the housing sector and protect home values recently threatened by the foreclosure crisis by providing meaningful and immediate assistance to families and communities affected by foreclosures, and to prevent other families and communities from finding themselves in the same situation in the future.
The bill included an amendment sponsored by Senator Salazar that would require the counseling entities and state housing finance agencies that receive credit counseling funding under the bill to coordinate with non-profit organizations currently operating toll-free foreclosure prevention hotlines. This would promote partnership with existing, proven initiatives like the Colorado Foreclosure Prevention Hotline, which has helped thousands of families in Colorado avoid foreclosure since its launch in October 2006.
“The housing crisis is one of the root causes of our nation’s broader economic troubles. Today, the Senate took a major step toward addressing that crisis by passing legislation that works to stabilize the housing sector and get our economy back on track,” said Senator Salazar. “All across Colorado and the nation, families are feeling the pain of the housing crisis and communities are being crippled by the ripple effect of declining home values and new housing starts. We must continue to work with our House colleagues to send legislation that addresses the crisis to the President’s desk as soon as possible.”
Specifically, the Senate legislation will:
Help families and communities affected by foreclosure by providing: (1) $100 million for credit counseling to help those at risk for foreclosure; (2) $4 billion in CDBG funds to provide assistance to communities affected by foreclosures by providing increased funding to states/localities with high foreclosure rates; and (3) $10 billion in tax-exempt bond authority to help families refinance out of bad loans.
Prevent foreclosures from occurring in the future by strengthening disclosure requirements on mortgage documents and expanding access to fixed-rate mortgages backed by the Federal Housing Administration.
The legislation also provides targeted tax relief for homeowners, homebuyers, and homebuilders, including:
A new standard deduction for property taxes for non-itemizing taxpayers who pay property taxes.
A temporary tax credit for homebuyers who purchase homes that have been foreclosed upon.
A provision allowing businesses affected by the housing downturn to carry back their 2008 and 2009 losses an additional two years for tax purposes.
At least 8,000 families nationwide lose their homes every day to foreclosure. Colorado was hit especially hard by the foreclosure crisis in its early stages, and will continue to feel widespread negative effects in the years to come. The Center for Responsible Lending projects that Colorado will experience nearly 50,000 additional foreclosures in 2008 and 2009, as adjustable-rate mortgages reset and as home values continue to plummet. In addition to those 50,000 foreclosures, almost 750,000 homes – approximately 35 percent of all the homes in Colorado – will suffer declines in their value for a total decline in statewide home values of $3.2 billion.
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