WASHINGTON – With home foreclosures rising in many states across the country, U.S. Sen. John Cornyn announced today that he has joined several other Republican Senators in co-sponsoring legislation to provide relief for families currently suffering from the growing housing mortgage crisis.
“Home foreclosures do more than harm individual families and threaten their achievement of the American dream. It also harms their neighbors and communities impacted by rising crime and decreasing property costs,” Sen. Cornyn said today. “Congress should not be bailing out those who took unnecessary risks or sought to make a quick dollar through real estate speculation. But we can take reasonable steps to help states and communities dealing with this growing crisis and provide tax incentives for families to purchase homes that have been foreclosed. I hope Senators in both parties work together to address this growing problem. I believe this legislation represents an important step forward.”
The Security Against Foreclosures and Education (SAFE) Act, co-sponsored by Senator Cornyn and others today, seeks to boost the nation’s confidence in the housing market by providing:
- $10 billion in bond authority to refinance distressed subprime mortgages;
- $15,000 tax credit (spread over three years) for the purchase of a new unoccupied or foreclosed home;
- Expedited delivery of $180 million in loan counseling funds to help families avoid foreclosure that was included in the Omnibus appropriations bill that became law in December;
- Updating Truth In Lending requirements that don’t currently cover newer adjustable rate mortgages so consumers will better understand the loans they are considering;
- Extension of foreclosure protection for veterans from 90 days to 6 months;
- Federal Housing Administration (FHA) reforms that would make purchasing a home more affordable for many Americans by increasing the loan amounts that FHA can insure and reducing the minimum down payment from 3 percent to 1.5 percent.
The Mortgage Bankers Association reported last week that loans past due or in foreclosure jumped to 7.9 percent of the total in the fourth quarter, from 7.3 percent at the end of September and 6.1 percent from December 2006. Before the third quarter, the rate had never exceeded 7 percent since 1979, the earliest year for which figures are available.
In addition, the Federal Reserve also reported Thursday that homeowner equity fell below 50 percent in the second quarter of last year, and it fell below 48 percent in the fourth quarter. This marks the first time, since the Federal Reserve started tracking this data in 1945, that the amount of debt tied-up in U.S. homes exceeds the equity homeowners have built up.
Although Texas did have the third-highest number of foreclosures in the country in January, the Dallas Morning News reported Friday that economists from Moody’s Economy.com “continue to see Texas’ housing markets holding up well in the current national downturn…. Moody’s analysts say that the Texas economy – unlike those in California, Nevada, Arizona, Florida and Michigan – is still expanding.”
Sen. Cornyn serves on the Armed Services, Judiciary and Budget Committees. In addition, he is Vice Chairman of the Senate Select Committee on Ethics. He serves as the top Republican on the Judiciary Committee’s Immigration, Border Security and Refugees subcommittee and the Armed Services Committee’s Airland subcommittee. He served previously as Texas Attorney General, Texas Supreme Court Justice, and Bexar County District Judge.