For Immediate Release
April 26, 2012
ESOP Supports Principal Modification Bill
Millions of underwater homeowners need relief. Shared Appreciation Modifications are a win-win solution for homeowners, taxpayers and investors.
CLEVELAND, OH – Yesterday Congressmen Gary Peters (D-MI), Dennis Ross (R-FL) and Keith Ellison (D-MN) introduced a bill that would save taxpayers money and keep families in their homes. Empowering and Strengthening Ohio’s People supports H.R. 1754 the Preserving American Homeownership Act of
2013 as a step forward for millions of struggling underwater homeowners.
“This is common sense policy,” said Mark Seifert, ESOP’s Executive Director. “It’s beyond me why more servicers, and especially FHFA, have not woken up to the urgent need to help underwater homeowners across the nation. Principal correction is proven to help keep people in their homes and minimize the loss to taxpayers and investors. We are overdue for a solution. We applaud Reps. Peters, Ross and Ellison for their bi-partisan leadership on preserving our economy and protecting homeowners nationwide. We look forward to working with Congress on passing this important bill.”
Particularly, minority communities are drowning in negative equity even more than non-minority communities. In order to fuel a more robust housing recovery we need to give hard hit markets a way to regain equity, otherwise the entire economy will just keep treading water.
"I commend the representatives for bringing this legislation forward,” said Ohio State Senator Nina Turner. “The program they propose has the potential to help thousands of Ohio families get back on the path to financial solvency and, in doing so, provide the shot in the arm that our economy and communities need.”
Contrary to what Edward DeMarco told the Senate Banking committee last week short sales and deeds-in-lieu are not relief to homeowners. They let the banks balance their books and speculators pick up a property for cheap, while leaving a family out on the street and in need of other services that often cost taxpayers money. Correcting principal mortgage balances to reflect true market values not only keep families in their homes, it also reduces the cost of foreclosure and the depression of home values. Private sector analysis has shown that principal reduction modifications have a lower re-default rate than other modifications.
This reduces the cost to taxpayers associated with foreclosures. FHFA’s own analysis has shown a well-designed principal correction program could save
taxpayers billions of dollars. Moreover, in a shared appreciation modification, when the home is sold or refinanced, any appreciation in value is shared which
further minimizes loss to the taxpayers.
SAM’s represent a win-win solution that benefits homeowners and taxpayers as well as provide a much needed boost the housing market. We encourage members of Congress to support this bill and work towards is passage.