Obama Announces Support for Plan to Address Housing Crisis

Senator Obama released the following statement on joining with Senator Chris Dodd to introduce legislation for a new FHA Housing Security Program.

“The subprime lending crisis continues to threaten the American Dream for millions of working families. Over two million households are at risk of foreclosure. The impact on our economy as a whole has been devastating, with a substantial and disturbing deterioration in our job market, housing market, and credit market in recent days. The decline in the housing market has left millions of people with mortgages that are larger than their homes are worth. Many Americans are choosing to walk away from their mortgages, which worsens the foreclosure problem, hurts property values for entire neighborhoods, and also substantially aggravates the credit crisis among lenders. That is why we urgently need a new strategy that allows homeowners to obtain mortgages with reasonable and fair terms, prevents foreclosures, and eases the credit crunch.

“It is past time for the federal government to take direct and decisive action. To provide immediate relief, I am proud to join with Chris Dodd – the Chairman of the Senate Banking Committee – to introduce legislation creating a new FHA Housing Security Program, which will provide meaningful incentives for lenders to buy or refinance existing mortgages, and to convert them into stable 30-year fixed mortgages so that homeowners facing foreclosure can keep their homes. This will provide a federal backstop for lenders to reduce the principal of loans that are priced higher than the value of a home so that they are affordable for homeowners. It is not a bailout for lenders or investors who gambled recklessly. It is not a windfall for borrowers. Instead, the Dodd-Obama bill is a responsible and fair way to help bring an end to the foreclosure crisis facing the country.

“This is part of my comprehensive mortgage agenda, which includes resources for pre-foreclosure counseling, a tax break to working families on their mortgage interest payments, and tough penalties on fraudulent lenders. We must provide immediate relief to American families and to the American economy, while also taking the necessary steps to prevent this crisis from happening again.”