Tierney E-Alert: Help for Homeowners
Dear Friend:

This week, the U.S. House of Representatives passed legislation by a vote of 272 to 152 addressing our country's housing and mortgage crisis. I am mindful that there have been some objections raised to the action: some argue that the free market should be working its will without congressional involvement; and others believe that no assistance should be given to those threatened with foreclosure as it might reward prior imprudent decisions.

While those perspectives are understandable, the size and seriousness of the crisis - which impacts more people than just those who have lost their homes and the estimated 3 to 4 million others who may lose their homes - warrant some intervention.

When foreclosures occur, there is a negative "ripple effect" throughout entire communities. Prices for surrounding homes drop. Cities and towns not only lose property tax revenues but must spend scarce tax-payer dollars on fire, police and maintenance bills as abandoned or ignored foreclosed properties raise the risk of arson and vandalism.

The bill that passed addresses a number of issues. It encourages lenders to "write down" outstanding mortgage balances to a percentage of the current, market-depressed values so that homeowners might manage to retain ownership or at least new buyers might be interested in purchasing at the lower price reflecting current conditions. Lenders would lose considerably (not entirely without justification as lenders were among the most culpable for today's housing conditions), and while homeowners would also lose, they would have the prospect of salvaging their homes. There would be no cost to taxpayers when the newly written loans are paid off, although there will be some if newly written loans fail.

Cities and towns benefit from the bill by assisting municipalities in reclaiming foreclosed properties at a discount and returning them to the tax rolls quickly by resale at the lower value, often to people now unable to afford a purchase at higher values. The intent is to help stem the significant losses in home values of neighboring homes. Additionally, the bill creates a new permanent affordable housing trust fund - not financed by taxpayers - to fund the construction, maintenance and preservation of affordable rental housing for low and very-low income individuals and families.

There are, of course, numerous other provisions in the legislation, and like every measure proposed, it is not perfect. On the whole, I believe the positive aspects outweighed the risks and that its passage has the prospect of beginning to shore up confidence in the housing market and help the economy generally.

This legislation seeks to provide assistance to those whose homes have been foreclosed, give confidence to those who are looking to buy a home and stabilize the market – all of which are critical components of helping the economy recover and regain strength.

Be well,


John F. Tierney
Member of Congress