Senator Jeff Merkley on “Paving the Way to a Healthy Housing Market”

At our event yesterday, “Mitigating the Impacts of the Current Foreclosure Crisis,” Senator Jeff Merkley (D-OR) laid out a convincing case for paying more attention to the ongoing foreclosure crisis, putting distressed homeowners first and supporting homeownership as a goal for America in the future.

The Senator described the transformation of the traditional, wealth-building mortgage industry into an extractive, predatory process with all the hallmarks of a scam (a story similar to that told by Kathleen Engel in The Subprime Virus.) He also discussed his work to end many of those predatory practices through the Dodd-Frank financial reforms.

The most powerful part of his remarks though, came when he shifted from the past and to the present and future. In Senator Merkley’s words, “It’s as if you had a massive flood and everyone rushed out to repair the dyke, but did nothing about the families whose homes are flooded.” More than a million foreclosures occurred in 2010 and millions more are on their way if nothing is done. The Senator laid out his plan to address the foreclosure crisis, noting that those issues are at the heart of our economic troubles and if we do not deal with them we will not solve our economic distress. He calls his plan, “Paving the Way to a Healthy Housing Market.”

Here’s a thumbnail sketch:

• Fix the loan modification mess (“a colossal disappointment”):
  • Include a single point of contact
  • End “dual tracking”
  • Mandatory 3rd Party Review
• Create “Win-Win” situations for homeowners and lenders
  • Opt-Out Mediation
  • Lease-Purchase scenarios
• Allow Bankruptcy Courts to cover home mortgages
• Institute a permanent tax credit targeted at first time, low- and moderate-income homebuyers

This a solid plan, and the Senator deserves credit for focusing on this core issue when there are so many other issues that seem to have seized the attention of our policymakers. Here’s Senator Merkley in his own words: