Congressmen respond to local foreclosure crisis

Bailout: the question for feds is how much and for whom, By Nick Troiano WAshington — As Pike County home foreclosures increase at record numbers, many residents are turning to the federal government for help. Vincent Rongione, spokesman for Congressman Christopher Carney (D-PA-10), said his staff has been fielding “a steady stream of calls” from constituents in foreclosure trouble. A point-person in charge of the mounting casework ensures they have access to the full resources of government agencies. The Housing and Economic Recovery Act of 2008, which took effect in October, is the current law under which residents could find some aid. An estimated 400,000 homeowners will be able to refinance under this law through the Federal Housing Administration. The act provides government insurance to lenders for mortgages in which payments for at-risk homeowners are reduced. A more recent Congressional proposal, which is part of a plan laid out by President Obama, would go even further. The Helping America Save their Homes Act would, among other things, provide incentives for loan negotiation between borrowers and lenders before foreclosure. It would also allow, as a last resort, bankruptcy courts to adjust the terms of mortgages, particularly if they determine the loans were predatory in nature. The act was passed by the House of Representatives on March 5 and is now awaiting consideration by the Senate. While Congressman Carney supported the October legislation, he opposed the new measure. “I cannot ask the 98 percent of homeowners in my district that work hard to keep their mortgages current to shoulder the load for the mortgages of deceitful borrowers who committed fraud, or borrowers who made bad decisions,” Carney said in a statement. Despite analysis by the Congressional Budget Office that shows a net savings by the federal government of over $7 billion through 2019, Rongione said that Congress “should take a deep breathe before throwing more taxpayer dollars at the problem.” He added, “We also do not want to reward folks who made bad judgments while people who lived within their means are still struggling.” Across the river, Congressman John Hall (D-19-N.Y.) saw it differently. “We all stand to lose if we do not stop the steep decline in home prices,” he said. But both offices pointed out that benefits from the American Recovery and Reinvestment Act are an indirect benefit to many residents through tax relief, unemployment benefits and health insurance. The Recovery Act also included an $8,000 first-time homebuyers’ tax credit and $2 billion for “neighborhood stabilization” programs. Meaghan Smith of Hall’s office said the office has averaged about 10 foreclosure related constituent calls per week since the fall, more than 200 calls since October. Yet foreclosures are still on an upward trend. “It’s terrible and getting worse,” says Pike Sheriff Phil Bueki, whose office is so overwhelmed it is scheduling sheriff sales into the month of October. According to Bueki there were 864 mortgage foreclosures in 2008, and another 220 from January to March 31 of 2009. The consequences are far-reaching, with neighbors and local governments standing to be adversely affected. The Treasury Department stated indicated that foreclosed homes may reduces nearby property values by as much as 9 percent. Realtors say the loses are much more. If homeowners challenge their assessed values, it could lead to decreased tax revenue. Dawn Contreras, manager of the Pike County Assessment Office, said that as county tax rates are based on 1994 property assessments, not many homeowners choose to challenge. While phone calls have increased with the economic crisis, actual challenges have not.