by Sen. Mark R Warner (D-VA) for The Hill

November 9, 2011


A couple weeks ago, I attended a community meeting hosted by faith leaders in Northern Virginia’s Prince William County that brought together more than 1,000 anxious homeowners and several leading mortgage lenders. 

Prince William County has led Virginia in foreclosures — 16,000, by some estimates — and some individual neighborhoods have seen home values fall by nearly 50 percent. 

When the housing market began its downward spiral three years ago, Washington responded by stabilizing the financial sector, but we did not take significant action on housing even though at least $50 billion in TARP funds was designated for that purpose. 

Many people thought that the problems with housing would simply work their way through the system over time, but that still has not happened.  

Across the political and economic spectrum, there now is a growing recognition that we must do more to fix housing, if we hope to see a genuine recovery in the broader economy. 

I believe we must take more aggressive steps to assist millions of homeowners trapped in mortgages worth more than their homes. At the same time, we must act to reduce and better manage the stock of vacant houses in places such as Prince William County, Va. 

The White House recently announced the expansion of the Home Affordable Refinance Program (HARP) to help more borrowers refinance into today’s lower 4 percent interest rate mortgages. 

This is an important improvement, and by some estimates, the expanded program will reach between 1 million and 2 million additional households, potentially saving each of those homeowners hundreds of dollars each month. 

But this does not go nearly far enough. Given the number of underwater mortgages and estimates of foreclosures yet to occur, we should set a more ambitious goal of helping at least 10 million homeowners stabilize their living situations and reduce their monthly housing expenses. 

First, we should first look for ways to expand the scope of the recent HARP changes by waiving fees and requiring more aggressive outreach to homeowners who might be eligible. Fannie Mae and Freddie Mac own some 30 million mortgages, and far more than just 2 million currently are underwater. If taxpayers already are on the hook for these Fannie and Freddie mortgages, they also would reap the benefit of every foreclosure we manage to prevent.

Second, we must find a way to better manage the homes that are already owned by the banks, Fannie and Freddie, as well as those homes that they will come to own through foreclosure over the coming months.

Rather than turning people out of their homes, why can’t we find a way to turn imminent foreclosures into long-term rentals? This could reduce the homeowner’s current monthly obligation and provide some community stability. It also would help shore up housing prices by reducing the number of homes being placed on the market at fire-sale prices.

Finally, I have heard heart-wrenching accounts from homeowners about predatory lending practices. There have been instances of recordkeeping errors by some lenders that resulted in families losing their homes. Other families were forced into homelessness during the robo-signing scandal. 

It is important that we see a settlement soon in the long-running U.S. Justice Department investigation into mortgage servicing and foreclosure practices. This could provide some near-term relief to those families that were wronged, protect those still in their homes and provide more certainty to investors who are waiting to re-enter the market.

These ideas raise some complicated logistical and political challenges, but I would argue it is worth our time, effort and trouble to sort through them. Because three years into the crisis, it is now clear that time alone has not healed the housing market — and families waiting for economic recovery deserve more than half-measures that simply nibble around the edges of the problem.

Warner, a co-founder of Nextel and former Virginia governor, serves on the U.S. Senate’s Banking, Budget, Commerce and Intelligence committees.