Millions of hardworking Americans have struggled through the recent collapse in the subprime mortgage industry. As many as 2.2 million families face the prospect of losing their homes in the coming years. This follows in the wake of more than 1.2 million foreclosure filings in 2006, up 42 percent from 2005. This week two congressional committees address the national crisis in the housing market.
The Joint Economic Committee follows up on an April report with a hearing about the local effects of the subprime mortgage fallout in Cleveland, Ohio, while the House Financial Services Subcommittee on Oversight and Investigations examines the federal government’s fair lending enforcement efforts of the Home Mortgage Disclosure Act.
Earlier this year, the Center for American Progress released a report on the issue titled “From Boom to Bust: Helping Families Prepare for the Rise in Subprime Mortgage Foreclosures.” As the committees meet to address the crisis, “From Boom to Bust” outlines key avenues for effective policy action, including:
- Federal grants to expand and enhance current mortgage assistance and foreclosure prevention programs and low-interest mortgage assistance to eligible borrowers.
- Federal funds to target key cities and states facing the highest risk of mass foreclosure.
- Provisions to ensure federal agencies assess the effectiveness of each program every three years.
- Strengthen programs that aid families while their mortgage contracts are renegotiated or the property is sold on the market so that the homeowners’ credit ratings are salvaged, allowing for the possibility of future homeownership.
While foreclosures are sometimes unavoidable, it is in the best interests of our communities and overall economy to support those who have embraced homeownership and work to prevent foreclosure. These measures are steps in the right direction.
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