U.S. homeowners are in desperate need of relief. More than 2 million homes are in some stage of foreclosure and millions more homeowners are in homes for which they owe more in mortgage payments than the property is worth.
The effect on the nationís well-being is dire. Housing wealth dropped by 57 percent, or $8.2 trillion from 2006 to 2011, resulting in net household wealth plummeting $14.3 trillion, according to a recent Harvard University housing report.
Communities of color have been hit hardest, with Latinos and African-Americans facing foreclosure rates of 11.9 percent and 9.8 percent respectively, compared to 5 percent for white homeowners.
Congress can do many things to right the housing market, but one option that is rapidly gaining traction is a set of three refinancing bills in the Senate that would help more than 12 million homeowners take advantage of historically low interest rates. The Center for Responsible Lending in a report released June 21 estimates that homeowners would save $39.5 billion annually.
The bills are aimed at helping homeowners who are current on their mortgage payments. In Ohio, the legislation would help more than 427,000 homeowners save an average of about $2,400 annually or $1 billion statewide.
Right now nearly half of home loans in our nation have interest rates above 5 percent and could benefit from refinancing to the record low rates now available ó the average interest rate on a 30-year fixed rate loan is now less than 4 percent.
One of the bills would amend the Home Affordable Refinance Program to make it more affordable to homeowners to refinance their loans owned by Fannie Mae and Freddie Mac. A second bill extends access to streamlined, low-cost refinancing for borrowers without Fannie or Freddie loans. A third bill provides lower-cost refinancing to help underwater homeowners pay down their loan principal faster.
The refinancing bills currently awaiting a vote in the U.S. Senate can put more money in the pockets of homeowners. Thatís a significant boost for local economies hit hardest by the housing bust and would keep more people in their homes. We urge Sens. Sherrod Brown and Rob Portman to support the legislation, which may be debated in the Senate in July. Helping hundreds of Akronites and thousands of Ohioans refinance is a bipartisan win-win for our state.
Passage of these bills would be a right step in addressing the housing crisis, but much more needs to be done. There are millions of homeowners facing foreclosure who would benefit from a large scale, mortgage principal-reduction program to correct the housing bubble of 2007. The program would reset underwater home loans to their fair market values and surely stem the tide of foreclosures. Also, expanded financial support for fair housing organizations and HUD-certified housing counseling agencies would help many families facing foreclosure find affordable solutions to keep them in their homes.
Our housing market is very sick, but our congressional leaders can provide the medicine thatís needed. While interest rates are at a historic low, itís time to help homeowners by allowing millions of families to refinance.
Fair Housing Advocates Association.