Because of the impending serious threat of the new prime mortgage crisis, we can't afford to wait until it deals another serious blow to the economy while we are still in the middle of a deep recession
Arlington VA (PRWEB) August 25, 2009
The American Homeowners Grassroots Alliance (AHGA) today urged the Chairman and ranking minorities of the Congressional tax writing committees to address the new mortgage crisis that is rapidly threatening drag our country into an even deeper recession. The current recession was set off by the subprime mortgage crisis. The new prime mortgage crisis poses a much greater threat to our economy.
Foreclosures on prime mortgages (the vast majority of all mortgages) are increasing very rapidly as growing unemployment and underemployment is leaving more homeowners with good credit histories unable to keep up with their mortgages. At the beginning of 2007 only about 2% of prime mortgages (fixed rate or adjustable) were in foreclosure or more than 90 days delinquent. At the end of the second quarter of this year, that number was closing in on 20%. Although the total number of remaining subprime mortgages has declined, the share that were in foreclosure or more than 90 days delinquent has grown from 8% to 27% over the same period.
The growing affordability and recent increased sales of existing homes have not solved the problem. A significant factor in the recent growth in home sales is the 10% first time home buyers tax credit, which expires on December 1, 2009. The total amount of time from the beginning of a search for a home through the mortgage financing process and final settlement is normally more than two months. This means that the stimulative effect of the first time buyer's tax credit will largely be over by the time Congress returns to Washington D.C. next month.
Most economists say our economic recovery will be mostly jobless when it begins. That means there is little chance that most of the homeowners who lost their jobs during the recession will soon be able to find work and resume their mortgage payments. Legislation must therefore be enacted to replace and enhance the expiring first time home buyers tax credit, or the growing prime mortgage crisis will almost certainly drag our nation into an even deeper recession.
The best alternative to prevent that from happening is for Congress to quickly pass S. 1230 and H.R.1245, according to AHGA President Bruce N. Hahn. These bills will increase the 10% first time home buyer's tax credit limit from $8,000 to $15,000 and expand the credit's eligibility to apply to any buyer. The legislation would also eliminate the current $75,000/individual and $150,000/couple income caps, and extend the tax credit for one year from date of enactment.
In August 24 letters to Senators Max Baucus and Charles Grassley, and Representatives Charles Rangel and Dave Camp, AHGA urged the leaders of the Senate Finance and House Ways & Means Committees to make the passage of this legislation their highest priority in this Congress. "Because of the impending serious threat of the new prime mortgage crisis, we can't afford to wait until it deals another serious blow to the economy while we are still in the middle of a deep recession", said the AHGA President. AHGA is also asking members and other homeowners to contact their legislators through www,AmericanHomeowners.org,
The American Homeowners Grassroots Alliance is a national consumer advocacy organization dedicated to helping more than 70 million American homeowners better understand the major economic issues affecting their home and their lifestyle, and empowering them to make their voices heard by government officials. More about AHGA is at http://www.AmericanHomeowners.org.