Press Releases

Payne Backs Plan to Address Housing Crisis, Preserve the American Dream

One in 37 New Jersey Homeowners Could Lose Home to Foreclosure

Washington, D.C. – Congressman Donald M. Payne today responded to the housing crisis that to date has been the root cause of the current recession.  He backed key legislation that will help improve home values and assist Americans who are struggling with the housing and credit crises. The American Housing Rescue and Foreclosure Prevention Act of 2008, and the Neighborhood Stabilization Act of 2008 were approved today by the House with bipartisan support.

“Owning a home is the American Dream, but thousands of New Jerseyans are on the brink of becoming the next victims of the housing crisis,” said Payne. “I am proud that we have backed a plan that will help homeowners who are struggling and help end this crisis.”

The housing crisis has had a significant impact in New Jersey. One in 37 homeowners is projected to lose their homes to foreclosure over the next two years. Homeowners who do not lose their homes have also been hurt by the crisis. The Pew Charitable Trusts estimates that 54% of all New Jersey homeowners will feel the ripple effects of the housing crisis. The crisis could also cost the state and local tax base $20 billion.

The American Housing Rescue and Foreclosure Prevention Act of 2008 will provide mortgage refinancing assistance, which will help keep families from losing their homes and protect neighboring home values. The plan also expands programs run by the Federal Housing Administration (FHA) that will allow borrowers in danger of losing their home to refinance into lower-cost government-insured mortgages they can afford to repay. 

The plan is not a bailout and requires both homeowners and lenders to take responsibility. In order to qualify for refinancing and a new government backed mortgage, lenders and mortgage investors will be required to take a loss and borrowers must share any profit from the resale of a refinanced home with the government. Additionally, the new plan is open only to owner-occupied homes. Speculators, investors and vacation/second-home owners are not eligible.

The House also passed the Neighborhood Stabilization Act of 2008, which provides $15 billion in loans and grants to states to acquire vacant, foreclosed homes. The legislation will allow local communities to rehabilitate foreclosed properties, which currently drive down surrounding home property values, and place these homes back on the market.

“The housing crisis is impacting all of us,” added Payne. “Families who lose their homes are directly impacted, but their former neighbors have also seen their homes lose value. Our comprehensive approach will help end this crisis and get our economy back on track.”