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My colleagues in Congress and I spent a majority of last week working on, debating and passing bills focused on stabilizing the housing market and strengthening our economy. The faltering housing market has affected all aspects of our economic state. Folks only need to drive around their neighborhoods or down the street to see its devastating effects. Odds are that one in 13 families is currently behind on their mortgage payments.
I know there has been some debate about the government's role in the housing crisis. But, if these hard times can teach us anything it's that your prosperity is, and always will be, tied to the prosperity of our neighbors. For example, if the struggling family on your block is foreclosed on and an estimated 2 million American families will be you'll likely feel the effects. If your home is within an eighth of a mile, its value will drop by an average of $5,000.
Home prices are set to decline for the second year running, the first time that's happened since the Great Depression. The mortgage fiasco is unarguably the single biggest drag on our economy and the primary reason for our current economic troubles. We can't get our economy back on track until we solve this crisis.
The administration has done little to ease the situation. My Democratic colleagues and I took charge of addressing the problem legislatively because we not only realize the urgency of the situation, but know this is a central piece of stabilizing our economy.
In the short term, we've already passed a targeted economic stimulus package, which is expected to help create some 500,000 jobs. The package includes the recovery rebates that Americans have already begun to receive, financing options for families threatened by foreclosure, and incentives for small businesses to continue investing in their communities. Should further stimulus prove necessary, it could mean investing in our worn-down infrastructure, or temporarily extending unemployment and increasing food-stamp benefits.
When it comes to homes that have already been foreclosed on, we need to act now to prevent a vicious cycle: foreclosures, falling property values, declining property tax collections, cutbacks in city services, rising crime, and more foreclosures. We can cut off that cycle with a neighborhood stability bill that will help cities and states buy up foreclosed properties and fight neighborhood blight.
Above all, our thoughts are with the millions of homeowners whose houses are hanging in the balance.
They're the reason that Congress has just passed the American Housing Rescue and Foreclosure Prevention Act, landmark legislation that will enable hundreds of thousands of them - and possibly up to one million - to refinance their homes, switching from risky subprime mortgages to safer loans backed by the Federal Housing Administration.
It's not a bailout: Lenders will have to take losses, and borrowers must agree to share with the government any profit from the resale of a refinanced home. But it is a common-sense effort to stabilize the housing market.
And, the bill addresses a concern weighing on the minds of many Hoosier homeowners: rising property taxes. It contains a provision, which I drafted, that provides an additional standard deduction of up to $350 ($700 for joint filers), on top of the basic standard deduction, for state, local and real-property taxes. Millions of homeowners are facing soaring property tax bills and declining home values. The tax code compounds this problem by excluding nearly 30 million middle-class homeowners who don't itemize their tax returns from being able to deduct their property taxes.
I think Federal Reserve Chairman Ben Bernanke put it best this week: "High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy. Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It's in everybody's interest."
Hill is Indiana's Ninth District Congressman.