Massa Press Conference: Foreclosure Prevention

Today's Massa press conference concentrates on the Foreclosure Prevention Act.

Massa began with a summary of the status of the bill, and a list of who voted for it:

Something happened this morning at 7 AM. President Bush signed into law HR 3221, the Foreclosure Prevention Act of 2008. As you all know, we've been watching for quite a while as the mortgage and housing markets have imploded. [...] There was a 15% decrease in home sales year-to-date this year.

Last week, 45 House Republicans and 13 Senate Republicans crossed party lines to pass the Foreclosure Prevention Act. Four New York Representatives voted "Yes": Peter King [NY- 3], John McHugh [NY- 23], Tom Reynolds [NY-26] and Jim Walsh [NY-25]. I would like to re-iterate my thanks and respect for their courage in doing so.

Massa noted that "the bill is not perfect," but he believes that it prevents foreclosures for 400,000 families, shores up the housing market, ensures the availability of affordable home loans, and lowers property tax for up to 30 million Americans. For those reasons, he said "I think it makes sense."

Massa called out a couple of what he thinks are the most important provisions of the bill:

At the crux of the bill is empowerment of the FHA. And while many call this a "hundreds of billions of dollars bailout", that's really a misrepresentation. The FHA is going to lenders who would be forced to foreclose, guaranteeing those loans, and presenting homeowners with schedules that can be met. The only way those loans can cost money is if those homeowners default on their debt.

[The bill] also opens a line of credit to Fannie Mae and Freddie Mac. It's not a bailout. While I am not happy with what's happened, it's my choice to keep them solvent rather than watch our economy spin into a 1920's-style recession.

Massa concluded by noting that Randy Kuhl voted against the bill, saying "I disagree with my opponent."

Bob Clark from the Hornell Evening Tribune asked Massa to elaborate on how the bill cut taxes.

As these homes are foreclosed upon, those properties do not have taxes paid. If you're a homeowner, and the house you owned goes into default, the house sits vacant. Nobody pays property taxes on this. If you don't [have HR 3221], you'll see a huge increase n property taxes because nobody can contribute.

Massa noted that this phenomenon is already appearing in areas where the housing crisis has hit hardest: "Municipalities are struggling to maintain critical infrastructure."

I asked Massa whether why the shareholders of Fannie Mae and Freddie Mac should have the share price of their stock protected by the bailout.

There's no doubt [that they shouldn't], and we've seen a devaluation. [...] The question is how much lower the stock can go before they go into default. When that happens, it's all she wrote. We're talking millions of mortgage owners in trouble. Though "bailout" has some validity, it's not a bailout like Bear/Stearns or a FDIC bailout like the one in California. This is actually a line of credit that ensures their solvency. It must be monitored very closely. In this bill is a whole new and largely missing seris of bank inspection and bank oversight that's largely gone undone in the Bush administration.

Massa added that he's not happy that the bill is missing accountability for major players like top officials and the Board of Directors. Finally, he noted that there's more of these types of unhappy compromises coming down the pike:

In many cases, as a philosophical statement, we're going to have to undo a lot of damage that has been done. Remember in the course of the 2000 election, the argument was about [...] how we're going to spend a $1.7 trillion surplus. It's almost unimaginable 8 years later that Governor Patterson is calling the legislature back into special session in the midst of one of the worst financial crises New York has ever faced. [...] We are now trying to figure out how to undo 8 years of catastrophic failure of this administration. [The mortgage crisis] is another brick in the wall. We must tear down the wall of failure of this administration. This will take imagination and compromises. There will be no silver bullet. Nobody will walk away happy.

The other reporter on the call was someone from WLEA radio in Hornell.


If Bush signed the bill, and Eric agreed, does that make Eric a "Bush Rubberstamp" ?

When he agrees with Bush, it's "reaching across the aisle". Get your terms straight. :)

Actually, Bush was threatening to veto the legislation for a while and changed his mind, so it's hard to say if there's a "rubber stamp" position here.