Here's what Merkley's plan calls for:The U.S. Treasury Department has approved a Multnomah County pilot program to help underwater homeowners refinance into lower-rate loans, even if their loans aren't backed by Fannie Mae and Freddie Mac.
The program is based on the Rebuilding American Homeownership white paper Sen. Jeff Merkley, D-Ore., released in July. It will be administered by the Oregon Housing and Community Services Department and paid for through Oregon's share of the Treasury’s Hardest Hit fund, which awarded money to 18 states and the District of Columbia for foreclosure assistance.
Oregon and the Treasury had been working on the program since last year. It's the first of its kind, but Merkley's office said other states are considering similar programs using Hardest Hit funds.
"I look forward to seeing this pilot program get under way and provide a model to other states struggling to get housing markets back on track," Merkley said in a news release announcing the pilot. - The Oregonian, 2/11/13
I wrote about Merkley's plan, The 4% Mortgage: Rebuilding American Homeownership, a little while back. You can read more about it here:Merkley's plan would use government-back bonds to create a trust fund that would finance new mortgages for an estimated 8 million homeowners – 85,000 in Oregon - whose mortgages are more than the value of their homes.
That trust fund would be used to offer a new 15-year mortgage at 4 percent or a 30-year term at 5 percent. Both rates would be lower than the mortgage they replace and could substantially cut monthly payments, freeing up income that families can use for other purposes, Merkley said.
“This goes right to the success of families,” Merkley said in an interview Wednesday to discuss the initiative. “It helps repair a little of the damage we did by allowing these predatory mortgages that basically drove this entire bubble.
“These families … have done everything that’s expected of them. They pursued the dream of home ownership; they got caught in a bad economic cycle driven by predatory loans they had no role in creating.” - The Oregonian, 11/26/12
Or I can let Senator Merkley explain it himself:
Merkley's plan has been endorsed by the National Association of REALTORS, Dr. Joseph Stiglitz and Mark Zandi of Moody's Analytics:
“Senator Merkley’s proposal would develop a trust to purchase mortgages from loan originators and investors to offer refinance tools that either help homeowners rebuild equity quicker, lower their monthly payments, or ease the payment burden on severely underwater mortgages,” said 2012 NAR President Moe Veissi. “That is exactly the innovative approach that our nation must take to ensure a sustained housing recovery.” - merkley.senate.gov, 7/25/12
“America’s economic recovery is being held back by $700 billion in negative equity in the housing market,” said Dr. Joseph Stiglitz, Professor of Economics, Columbia University. “Millions of homeowners are unable to refinance, because they are underwater on their mortgage and their loan does not carry a government guarantee. Senator Merkley’s broad refinance proposal would allow these families to refinance into loans with a lower interest rate, freeing consumer resources to be spent on other important needs, or allowing the homeowner to rebuild equity more quickly. If adopted, this proposal would help to stabilize the housing market, create new jobs, and boost our overall economy.” - merkley.senate.gov, 7/25/12
So if you are a resident of Multnomah County, here's where you can want to sign up for the Rebuilding American Homeownership Pilot Program:“Senator Merkley’s plan is a creative and bold effort to address the serious economic threat posed by millions of underwater homeowners,” said Mark Zandi, Chief Economist, Moody's Analytics. “With so many underwater, odds remain uncomfortably high that the housing market and broader economy will continue to struggle. Previous attempts to solve this problem have fallen well short. Senator Merkley’s plan is an ambitious one, and should be carefully considered.” - merkley.senate.gov, 7/25/12
By the way, did you know that Senator Merkley was made chairman of the Senate Banking Committee’s subcommittee on economic policy? Now you do:
Thank you Senator Merkley for dedication to help underwater homeowners. Lets make sure Merkley stays in the Senate and donate to his re-election campaign:Junior Sen. Jeff Merkley (D-Ore.) has been named as chairman of the Senate Banking Committee’s subcommittee on economic policy, which oversees economic issues as well as the Financial Stability Oversight Council created by Dodd-Frank.
“We need an economy that creates opportunities and good jobs for everyone who’s willing to work hard,” Merkley said, according to the Portland Business Journal. “Too many Oregonians are still out of work, and too many who work are scrimping and scraping just to tread water. I look forward to using my new role as subcommittee chairman to push for pro-growth policies that give working families and small businesses across Oregon the chance to get ahead.”
Additionally, Merkley also called on Senate Republicans last week to avoid a filibuster of CFPB Director Richard Cordray’s re-nomination to lead the agency.
“The GOP effort to undermine the work of the Consumer Financial Protection Bureau is an attack on America’s families,” Merkley said, TPM reports. “Predatory mortgages and other tricks and traps of the financial system have devastated too many working families. The CFPB was created, with the support of a supermajority of senators, to take on these egregious abuses and ensure that all Americans are protected from unfair and deceptive practices.” - Bank Credit News, 2/11/13