Conyers Calls on Congress to Pass Obama Housing Assistance Plan that Includes Principal Reduction for Underwater Homeowners

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For Immediate Release

Date: Wednesday, February 1, 2012

Contact: Matthew Morgan – 202-226-5543

Conyers Calls on Congress to Pass Obama Housing Assistance Plan that Includes Principal Reduction for Underwater Homeowners

(WASHINGTON) – Today, House Judiciary Committee Ranking Member John Conyers, Jr. (D-Mich.) released the following statement applauding the Obama Administration’s plan to help make it easier for underwater homeowners to refinance their mortgages to take advantage of historically low interest rates.  The Obama Administration estimates that the plan could help nearly 11 million underwater Americans save approximately $3,000 a year on their housing payments.  U.S. homeowners owe approximately $700 billion in underwater debt as a result of the financial crisis of 2008.  

U.S. Representative
John Conyers, Jr.

“The plan the Obama Administration sent to Congress today will help bolster the housing market and provide much needed relief to homeowners who owe more on their mortgages than the value of their homes,” said Conyers.  “Congress should put the well-being of the American people above political posturing and pass this deficit neutral, common sense plan immediately.

“I also call on my colleagues in the House and Senate to take the opportunity to build on the President’s plan by including legislation in this package that requires some form of principal reduction for underwater homeowners.  Economists, housing policy advocates, and analysts at the Federal Reserve all agree that reducing the amount of underwater principal owed by homeowners is the most effective way to prevent foreclosures and stabilize our communities.

“A good place to start would be for Congress to require government-backed lenders Fannie Mae and Freddie Mac to write down the principal of the mortgages they own.  As I have argued for many years, such an action would provide immediate assistance to homeowners, provide a positive jolt to the economy, and lower taxpayers’ liability by helping keep homeowners current on their mortgage payments. 

“Fannie and Freddie’s regulator, the Federal Housing Financing Agency (FHFA), has the power to implement a principal reduction program.  However, up until now its Director has failed to implement such a program.  If FHFA refuses to act to stem the tide of foreclosures destroying communities in Southeast Michigan and across the country, Congress must provide the leadership that FHFA has failed to exercise.”

For additional information regarding President Obama’s proposal go to: http://www.whitehouse.gov/the-press-office/2012/02/01/fact-sheet-president-obama-s-plan-help-responsible-homeowners-and-heal-h

From Rep. John Conyers: Easing Homeowners’ Debt

To the Editor:

Re “Homeowners Need Help” (editorial, Aug. 22):

John Conyers, Jr.

You are right that the federal government could do much more to help homeowners climb out from underwater mortgages, and that banks have done far less than they can for homeowners seeking relief.

The key to unlocking the mortgage foreclosure crisis is the passage of a federal law allowing homeowners to reduce their mortgage debt to no more than the current value of their property.

Homeowners and the federal government have not had much leverage to get banks to stop the mortgage crisis. Current law discourages banks from voluntarily making loan adjustments that homeowners need. Giving homeowners the right to reduce their debt through recognized legal processes would no doubt provide additional incentives for lenders to work with borrowers.

This is neither a new nor a radical proposal. In 1986, Congress passed a law that allowed family farmers to modify their mortgages in response to a similar foreclosure crisis. It was so successful that in 2005, with bipartisan support, it was made permanent law. If only we could do for struggling homeowners today what we did for family farmers 25 years ago.

Last Congress, legislation that would have provided such a remedy to homeowners passed the House but died in the Senate. The bill was reintroduced, and it is my hope that Congress will take up this essential legislation soon.

JOHN CONYERS Jr.
Washington, Aug. 29, 2011

The writer is the ranking Democrat on the House Judiciary Committee.