Press Release - Tuesday, July 08, 2008
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Governor Blagojevich joins with fellow governors in sending a letter to Congressional leadership urging action on nationwide mortgage crisis
CHICAGO - Gov. Rod R. Blagojevich today joined with the governors of 14 other states in a letter urging Congressional leaders to include $4 billion for community development block grant (CDBG) funding for neighborhood stabilization in the 2008 Foreclosure Prevention Act to address the nationwide mortgage crisis.
The Foreclosure Prevention Act of 2008, would create a program offering lenders a federal guarantee on renegotiated mortgages with borrowers whose houses are worth substantially less than their mortgage is worth. The funding for the CDBG is currently in the Senate version of the bill but the White House has voiced objections. These 14 governors are coming together to make sure this crucial funding is included in the legislation that passes.
"If this legislation is approved, it could mean that our state will receive $136 million in neighborhood stabilization grants that would allow us to purchase and rehabilitate foreclosed properties and relieve some of the pressure that homeowners are feeling right now," said Governor Blagojevich. "These neighborhood stabilization funds go beyond helping those caught in the mortgage crunch - they help everyone retain the value in their homes. This is simply good policy."
The emergency funds would go towards the acquisition and rehabilitation of foreclosed and abandoned properties and will help communities to eliminate blight, control crime and stabilize property values in each state.
"In Illinois, we have been making great strides in helping our citizens avoid the crushing blow of losing their homes, including our Illinois Homeowner Assistance Initiative," said Governor Blagojevich. "While these programs have proved effective, we need increased federal action into this nationwide housing crisis. I hope Congress hears our voice and takes action immediately."
In an effort to help those homeowners affected in Illinois, Governor Blagojevich announced an expansion of the Illinois Homeowner Assistance Initiative on February 14, which included a $200 million Illinois Homeowner Assistance Pool to provide predictable, fixed-rate mortgages from a committed pool of five lenders for Illinois borrowers with moderately good credit; established a statewide counseling network to help homeowners know their options; and made it easier for consumers to report fraudulent and deceptive practices.
The text of the letter is as follows:
Dear Majority Leader Reid, Senator McConnell, Speaker Pelosi, and Congressman Boehner:
We write today to urge the swift passage of legislation to address the nationwide mortgage crisis. Further, we strongly encourage you to include at least $4 billion in neighborhood stabilization funds as part of your response.
The nation is experiencing a housing crisis unlike any since the Great Depression. More than three million homeowners are in distress, and experts estimate that one million more will fall behind on their mortgage payments this year as home values continue to fall. New projections show that one in 33 homeowners nationwide will be in foreclosure in the next two years as a direct result of subprime loans.
As Governors, we have experienced firsthand the devastating effects of foreclosure on our residents and communities. Blight has increased along with the number of vacant properties. Even homeowners who are current on their mortgages experience the effects of nearby foreclosures; nearly 40 million homes will lose value as a result of subprime foreclosures in their communities. Emergency funds for the acquisition and rehabilitation of foreclosed and abandoned properties will help communities to eliminate blight, control crime, and stabilize property values. These funds would also create jobs, which is important given our struggling national economy.
States have already contributed scarce resources and put innovative programs to work to address this problem, but more needs to be done at the federal level. As negotiations continue on much-needed housing legislation, we strongly urge that a minimum of $4 billion in neighborhood stabilization funds be included. Thank you for your attention to this matter.
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