Senate Passes Leahy-Sanders Formula That Would Net Nearly $20 M. For Vermont To Help Stem Mortgage Crisis

WASHINGTON – Thursday, April 10 – The U.S. Senate has passed legislation authored by Vermont’s two U.S. Senators – Patrick Leahy (D) and Bernie Sanders (I) – that would bring nearly $20 million in emergency relief to Vermont’s neighborhoods and communities, to quickly redevelop and resell or rent abandoned and foreclosed homes and help stabilize home values, rents and local economies.

The Senate-passed Foreclosure Prevention Act includes $3.92 billion for communities to use in buying and rehabilitating vacant foreclosed homes, as well as $13 billion in new tax incentives to help spur the sagging housing market.  The rehab funds will be allocated through the Community Development Block Grant (CDBG) Program.  Leahy and Sanders added a formula to distribute the CDBG funds under an all-state minimum that would assure a minimum allocation of .5 percent to each state, ensuring that funds reach small states like Vermont, as well as larger states.  The Senate by unanimous consent Wednesday night added the Leahy-Sanders all-state minimum amendment to the housing bill, which then passed the Senate Thursday in a vote of 84 to 12.  The bill will go to conference with a counterpart House bill, which is also on a legislative fast track.

Leahy and Sanders said Vermont stands to receive at least $19.6 million in CDBG funds under their formula, to help communities prevent foreclosures and redevelop abandoned and foreclosed homes.  Rehabilitated homes, purchased at a discount, would be used to stabilize neighborhoods and stem the significant losses in home values.

Leahy said, “So far Vermont has not been hurt as badly as other states, but even our rates are rising, and time is not on our side.  The sluggish national economy and the rising cost of housing in Vermont is a one-two punch that is pushing affordable housing out of the reach of many Vermont families.  The sooner we can step up our efforts to minimize the withering effects of the mortgage crisis on our neighborhoods and communities, the better off we will be and the sooner we all can pull out of this downturn.  Our legislation would make sure that Vermont and other small states get the same kind of emergency help that larger states would get.”

Sanders said, “While the overall bill was certainly not everything we wanted, this $20 million will help Vermont deal with the foreclosure crisis that is sweeping the country.  With this funding, it is my hope that Vermont’s cities and towns will be able to provide immediate assistance to the struggling middle class trying to hold onto their homes and improve communities hit hard by foreclosures.  Clearly, we must do everything we can to prevent the American dream of homeownership from turning into the American nightmare of foreclosure that too many American families are experiencing.”

Though the mortgage crisis is worse in other regions of the country, foreclosure rates also continue to rise in Vermont, particularly in the Northeast Kingdom and Southeastern Vermont.  According to Vermont’s Department of Banking, Insurance, Securities and Health Care Administration, for the first quarter of 2008, more than 400 new foreclosures have been filed in Vermont, a 30 percent increase over those filed for the same quarter last year.  If that pattern holds, Vermont this year could be facing about 1600 foreclosures.  Subprime mortgage-related foreclosures will cost Vermont $74.5 million over the second half of 2007 through the end of 2009, according to Congress’s Joint Economic Committee, which also says the losses nationwide will reach nearly $104 billion.

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