Project Homeless Connect Sets Backdrop for Policy to Prevent Foreclosures

Jan 28, 2011 Issues:
Project Homeless Connect Sets Backdrop for Policy to Prevent Foreclosures

WASHINGTON, DC– With thousands of foreclosures continuing to ravage Rhode Island, the number of homeless people has risen. That’s part of the reason why U.S. Congressman David Cicilline (D-RI) today visited Project Homeless Connect to meet with individuals who are experiencing homelessness and learn about services his office can provide Rhode Islanders who might find themselves in a similar situation.  Cicilline made stops at two sites in Woonsocket and Pawtucket.

Cicilline earlier this week also co-sponsored far-reaching legislation to stem the tide of foreclosures that have affected communities in Rhode Island and nationwide. While Rhode Island housing prices may be showing some growth, the total number of homes sold in the state has not immediately followed that trend.

The Housing Opportunity and Mortgage Equity (HOME) Act, H.R. 363, sponsored by Congressman Dennis Cardoza (D-CA) would allow as many as 30 million homeowners with mortgages backed by Fannie Mae or Freddie Mac to benefit from the current historically low market interest rates and refinance for up to 40 years at a fixed rate.  Refinancing would significantly lower the homeowner’s monthly mortgage payments, resulting in fewer foreclosures, and stabilizing the housing market and our economy.

“The cost of home foreclosure has a human face – and we cannot forget that,” said Congressman Cicilline. “We can no longer afford temporary solutions to the growing foreclosure problem in our country. The HOME Act works to significantly reduce the number of foreclosures and stabilize the housing market at little or no cost to taxpayers.”

Congressman Cardoza said, “The housing crisis has devastated communities coast-to-coast, from Rhode Island to my home state of California.  We will need broad support to pass the bold legislation necessary to make a serious dent in the number of homes slipping into foreclosure every day.  I thank Rep. Cicilline for his leadership in being one of the first members of Congress to sign on as a co-sponsor of the HOME Act, which will help millions of homeowners avoid foreclosure.”

The HOME Act would come at little to no cost to taxpayers because the fees for refinancing would be rolled into the new mortgages and penalties would be waived.  Furthermore, since the federal government is ultimately liable for the mortgages issued by Fannie and Freddie, the HOME Act would help reduce that liability by reducing the number of foreclosures. 

It would also reinvigorate the economy by giving millions of Americans a reduced mortgage payment, resulting in more money to spend on purchases. Morgan Stanley and JP Morgan Chase have evaluated potential savings from a refinancing program like the HOME Act and have estimated it would reduce mortgage payments by $50 billion or more annually.

According to the Providence Journal, last year in Rhode Island home sales saw 6,833 houses, down 12% from the 7,732 houses sold in 2009. Additionally, the median price for a single-family house in Rhode Island is still 26% below the peak price recorded in 2005.

The HOME Act currently has 24 co-sponsors.