Issue Position: Housing

Issue Position

KEEPING CONNECTICUT FAMILIES IN THEIR HOMES

My family didn't have a lot growing up, but we had a house. Too many families are having trouble holding onto their homes in this economy. We have to act now to keep families in their homes.

The housing crisis was at the root of the 2008 financial meltdown, and fixing it is at the root of the recovery. Across the country, we owe nearly $700 billion more on mortgages than our homes are worth. There are over 100,000 underwater mortgages in Connecticut alone. Ordinary, responsible Americans are suffering from the burst of the housing bubble -- a family that bought a median-price house in 2005 and put 20% down has lost all of their home equity today.

We need an emergency plan to refinance America's mortgage debt using all means at our disposal, including rate reductions, principal reductions, and bridge lending programs.

The housing crisis is a drag on the economy preventing it from growing again. We need to take bold action to stop the slide in our housing market and keep Connecticut families in their homes.

Here's what we should do to fix this crisis and reclaim the American Dream for us all:

Refinance America's mortgage debt by reducing all federally-backed mortgages to a 4% rate over new 15- or 30-year terms.
This will put, on average, more than $2800/year back in the pockets of Connecticut families, and it will redirect approximately $1 billion back into the state's economy and $70 billion back into the U.S. economy as a whole every year.

Expand principal reduction programs modeled on Hardest Hit Fund pilot programs in states like Nevada and California.
Drawing on principal reduction programs from other states, homeowners who are deeply underwater but are making payments should be able to reduce the principal owed on their loan over time.

Provide income assistance loans to homeowners who suffer a significant income disruption, such as job loss. Job loss is the leading cause of mortgage default. We can stop the slide into foreclosure by offering bridge loans to keep up payments.

The program would help homeowners who have lost their jobs to keep paying their mortgages by providing short-term bridge loans for the percent of mortgage payment equal to percent of household income lost.

For example, if you lose half your household income, you're eligible for a loan worth half of your mortgage payment, capped at $1500/month and for a maximum of two years.

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