NCRC: Use Taxpayer Dollars to Bail out FHA Borrowers
The National Community Reinvestment Coalition on Friday urged Congress to amend federal regulations to allow the Federal Housing Administration to refinance subprime borrowers' loans in default, a move it said will prevent a "torrent of defaults and foreclosures expected to deluge the mortgage market as a result of the subprime lending crisis." The NCRC also called for legislation to establish a national rescue fund to support low-income borrowers, funded by taxpayer dollars. "As this crisis worsens, mortgage tsunamis will ravage working-class neighborhoods across this country. Sheriffs will be knocking on people's doors, only to find keys and furniture left behind. This is not the way the market should work. We should have a higher standard. We should not allow this to happen," said NCRC's President and CEO John Taylor. "The Administration and Congress helped create the sub-prime crisis by ignoring warning signs and, as a result, they bear some responsibility for assisting the families facing payment shock and foreclosure," said Taylor in a letter addressed to President George Bush, Housing Secretary Alphonso Jackson, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Minority Leader John Boehner, Senate Minority Leader Mitch McConnell, U.S. Senators Chris Dodd and Richard Shelby and Congressmen Barney Frank and Spencer Bachus. "This Administration and the previous Congress allowed the horse not only to gallop out of the barn but jump over the cliff as well," said Taylor. "We call on this Administration and this Congress to take the reins back by immediately allowing FHA to play a role in helping borrowers and passing legislation to protect not only borrowers but also the nation's overall economy." The FHA proposal, Taylor emphasized, is not a "bail-out" of the borrowers in default or the lenders who made the bad loans, but a way to help borrowers quickly and keep them in their homes. He also said it should not be considered a long-term solution.