This article first appeared in the St. Louis Beacon, July 7, 2008 - Congress will approve a housing bill that includes foreclosure relief for troubled American homeowners promptly after the Fourth of July recess, Sen. Claire McCaskill (D-Mo) said Saturday.
"By the end of July the president will get the bill, and it would take a lot of nerve for him to veto it,'' McCaskill said after speaking to a foreclosure clinic she sponsored at the University of Missouri-St. Louis. "It's a struggle. The Bush administration has wanted to focus so much of the relief on the business side, as opposed to the families-who-are-hurting side. As everything is in Washington, it's a fight for the compromise. I think we're there.''
The Senate housing bill, similar to legislation passed by the House in May, includes a $300 billion fund to allow at-risk homeowners to refinance into more affordable mortgages through the Federal Housing Administration (FHA), provided their lenders agree to reduce the value of their loans. To battle a declining housing market and the negative impact of foreclosure on communities, the bill also includes an $8,000 tax credit for first-time homebuyers and $4 billion to help state and local governments buy and renovate foreclosed properties.
The legislation passed a procedural hurdle in the Senate on June 24 but stalled two days later when Sen. John Ensign (R-Nevada) attempted to attach an $8.2 billion amendment to extend renewable-energy tax credit breaks.
McCaskill took Ensign to task for his efforts to "hijack" the housing legislation, which has broad bipartisan support in the House and Senate.
"The irony is that Nevada has some of the nation's highest foreclosure rates,'' she said. "I hope the people in Nevada are paying attention.''
The legislation is being hotly debated in the public forum, including local talk-radio shows, with some arguing that the bill is an expensive bailout for the undeserving.
"People are making assumptions that just certain kinds of people are in this position,'' McCaskill said. "I think that people's stereotypes kick in. I don't think they realize that these distressed homes and families are all over the St. Louis area. From Chesterfield to South County to Warren County and St. Charles, there are homes facing foreclosure.''
McCaskill said the impact of the foreclosure crisis -- which analysts predict could reach 3 million nationally -- goes well beyond individual homeowners and is undermining the strength of the U.S. economy.
"There is this ripple effect that foreclosures have on the economy that we are focused on. This isn't about a bailout for any individual. This is about what's best for our economy so we don't fall off the table into a full-blown depression,'' she said.
Sen. Christopher "Kit" Bond (R-Mo.) is opposed to the housing bill because he says it puts American taxpayers on the hook for a massive government bailout of sub-prime lenders.
"It is critical that Congress acts now to provide families real housing relief and to prevent another crisis in the future, but this government bailout is the wrong solution,'' Bond said in a statement on his Web site on June 25. "American taxpayers should not be forced to pay for lenders' bad decisions.''
Bond's position is that troubled lenders would dump the worst of their bad loans on the new FHA program, resulting in a "massive, taxpayer-funded government bailout for sub-prime lenders."
President George W. Bush has threatened to veto the bill, which he, too, has characterized as a bailout.
Will the bill do enough?
As Congress deliberates, the number of foreclosures has grown: About 3 million homeowners are now in trouble, with 2 million more expected to run short on payments. The legislation under consideration will only help some, the New York Times reports.
McCaskill said the housing legislation is just one of several steps that need to be taken to protect a struggling U.S. economy from skyrocketing oil prices and the current credit crunch.
"Nobody can borrow money right now. So, the small businessman who was going to expand his business next year and hire another 10 people, all of a sudden the bank is telling him, 'I'm sorry, we can't loan you that money.' And so those 10 people don't get hired,'' she said.
"It's hard for people because they're used to operating within their lane. Can I pay my bills? And if I can pay my bills, why are we helping anybody who can't pay their bills? This is not about staying in your lane. This is about our overall economic strength right now as a nation and the things we can do that help the credit markets stabilize, that help the dollar strengthen, that cut out some of the speculation in oil. All of those things need to happen, and this housing bill is just one part of that.''
McCaskill has sponsored a series of foreclosure clinics throughout Missouri, inviting nonprofit housing counselors, lenders and industry experts to share information and advice with homeowners who are concerned about their mortgages. The majority of those in attendance Saturday were the experts, which McCaskill attributed to the fact that many troubled borrowers are not comfortable attending a public gathering.
"What you don't see in this room are the thousands and thousands and thousands of people who are just like you,'' she said to the homeowners in the assemblage. "We estimate up to 20,000 homes in Missouri will face foreclosure before the end of next year. So, imagine if we had 20,000 people in this room what it would look like. You are not in this alone. There are thousands and thousands and thousands of others out there that have the same kind of challenges."
We're here for a very important reason, knowledge is power. The way that you take control of your life is by making sure you know everything you need to know to make good choices. Now we've got some work to do in Washington in this regard because we've got to make sure that when people are entering into transactions, it is very clear and very obvious what is going to happen if they enter into that transaction. We had a very bad situation occur in this country, and that was the people who made money for selling real estate didn't care what happened after they got the name on the dotted line. So, as a result, they were all anxious to get the sale and really weren't anxious to talk about what might happen later. So that's how we got ourselves in this mess. The people who sold these loans had no risk, and the people who bought these loans were not given all the information they needed to make a good decision. So now what we want to do is make sure that everyone has all the information they need to travel through these rocky waters. And one of the things is that there are answers out there for some people. There are ways you can avoid foreclosure. We have just gathered together the experts. All the people in the community that can help: Bankers, credit counselors, housing agencies, people that are used to dealing with people in financial crisis and other kinds of crises. And they're here today to answer your questions. If you decide you want to take this on, you have a much better chance of beating it. Now if you decide you're going to ignore this thing and just wait and see what happens, it probably won't have a good ending. So what you're going to do today is you're going to arm yourself with information that will allow you to go forward in a way that will be best for you, your families, your neighbors and your communities. And by the way, you need to know that even though there are some of you in the room today, what you don't see in this room are the thousands and thousands and thousands of people that are just like you. We estimate up to 20,000 homes in Missouri will face foreclosure before the end of next year. So, imagine if we had 20,000 people in this room what it would look like. You are not in this alone. There are thousands and thousands and thousands of others out there that have the same kind of challenges. So we hopefully will get you some information today that will help. When we get back after this work period at home, we will be passing, I'm confident we will be passing a housing bill. And there are a number of things in the housing bill that will also help. There will be extra money that will be coming through to the states to help people refinance their loans. There will be first-time homebuyer credit so that we can get people out buying homes again so that we don't have the economic downturn that we're all worried about with the price of gasoline and everything else right now. — Sen. Claire McCaskill, excerpt of talk at a mortgage clinic held June 28.