Three years ago, the world began to face the reality of a global economic meltdown. Banks failed, neighborhood businesses closed and American families lost their jobs and homes.
The federal government has had no choice but to take aggressive, often unpopular, steps to prevent a collapse of the nation's financial system.
However, despite creating six major housing programs like the Home Affordable Modification Program (HAMP), Home Affordable Refinancing Program (HARP), and the Neighborhood Stabilization Program (NSP) at a cost of more than $70 billion to taxpayers, we have yet to establish a program that reaches far enough to stem the tide of foreclosures and help keep American families in their homes.
According to the most recent data provided by the Treasury Department, HAMP had only produced 448,937 permanent mortgage modifications as of the end of August 2010. Through the first quarter of 2010, Fannie Mae and Freddie Mac only refinanced 291,584 mortgages through HARP.
Make no mistake, our economy is on the difficult road to recovery. However, we must face the facts that foreclosures continue to slow our progress and the number of delinquencies continue to rise.
For more than two years now, I -- along with a growing number of economists -- have asserted that the solution is to lower homeowners' monthly mortgage payments and to allow them to refinance to a 30- or 40-year below-market fixed rate.
With the Obama administration poised for a major shakeup of its economic team, I believe it is critical to push forward with this far-reaching legislation that will do just that.
With that in mind, I have reintroduced the Housing Opportunity and Mortgage Equity (HOME) Act. The legislation was initially introduced in January 2009.
Since then I have received increased support and input from some of the nation's leading economists -- including Columbia Business School senior vice dean Christopher Mayer and Moody's analytics chief economist Mark Zandi -- and a number of my colleagues in the House of Representatives.
With adjustments to the legislation, and a changing of the guard in the administration, I believe it's critical to move forward.
The principle of The HOME Act remains simple. We can help stabilize housing values and reduce foreclosures by ensuring Americans have access to an affordable mortgage. As I and others have continued to say, this will also help stimulate the economy by putting more money in homeowners' pockets.
Using the conservatorship of Fannie Mae and Freddie Mac, all mortgages currently owned or guaranteed by the two government-sponsored enterprises that meet the basic criteria will qualify for the opportunity to refinance at historically-low market rates.
This would allow homeowners to reduce their monthly mortgage payment by hundreds of dollars -- reducing the number of defaults and preventing foreclosure.
To fund the program, Fannie and Freddie would issue new mortgage-backed securities and use the proceeds to pay off the existing securities (just like what happens now when borrowers refinance).
We are long past foreclosing on the subprime mortgages that helped create the meltdown. As the saying goes, we are now cutting into the bone: Middle-income families who through no fault of their own are now losing their homes.
We cannot understate, nor underestimate, the psychological impact the threat of foreclosure has on families and consumer confidence. As long as American families worry about losing their home, they will continue to hold tightly onto their cash, further delaying national recovery.
We also must recognize the psychological impact and hopeless feeling generated by having a home that is "underwater" in value.
As long as Fannie and Freddie remain under federal conservatorship, we have a unique opportunity to move this program forward.
After three years, it is clear that the Band-Aid solutions attempted by the administration are not working. As my constituents know all too well, only a shockingly tiny number of people have been able to successfully refinance under HAMP and HARP.
Our country urgently requires far-reaching programs like The HOME Act in order to make any bit of difference in this foreclosure crisis and prevent millions more from losing their homes.
American families have waited long enough. The time has come and the answer is to get them in affordable mortgages, providing them additional cash to invest in the economy.
Our path ahead is clear and The HOME Act can help pave the way to a stronger economy.
Rep. Dennis Cardoza represents the 18th Congressional District. He is running for re-election in November.