WASHINGTON, July 24 /PRNewswire-HISPANIC PR WIRE/ — The U.S. Hispanic Chamber of Commerce (USHCC) commended the U.S. House of Representatives’ passage last night of an important housing bill by a vote of 272 to 152 that will help stabilize housing and credit markets. The Senate is expected to pass the bill soon and President Bush is likely to sign it into law, unlike his threatened veto of previous versions.
The USHCC has been actively advocating on behalf of this legislation, including provisions related to refinancing of existing subprime loans, community-focused grants to purchase foreclosed and vacant units, and new incentives for the purchase or construction of housing. Earlier this year, USHCC Board Chairman David C. Lizárraga testified at a hearing before the House Committee on Financial Services in support of action regarding this nationwide crisis. That hearing focused on a housing rescue plan.
“There is no doubt that the instability in the housing and credit markets in our country have threatened both the entrepreneurial spirit and the assets of our underserved communities and small businesses,” said Lizárraga. “During this time of economic uncertainty, the passage of this bill should provide crucial help to improve the overall environment and bolster key sources of capital, such as housing and credit, relied upon by many of the 2.5 million Hispanic-owned businesses in the United States.”
Housing prices have fallen at a rapid rate for an extended period of time. And, if home prices were to decline 20% by the end of 2008, some estimates predict that there will be about 15 million homeowners — or 30% of all households — with mortgages that have negative equity. This would mean they have mortgage debt that exceeds the value of their home. About $1 trillion of mortgage debt will be owed by subprime borrowers, and $2 trillion will be debt previously rated as prime or near prime. A significant share of these borrowers would be likely to default. The bill could help many within the Hispanic community from falling into default and maintain their equity both personally and community-wide.
“The home is often the first type of substantive asset held by members of underserved communities such as our Hispanic community,” said Augustine Martinez, USHCC President and CEO. “Foreclosures and losses in home value, therefore, constitute a loss in perhaps the only substantial asset contributing to the net worth of most members of the Hispanic community. Small and minority business owners often use their home equity to secure loans to help finance the establishment or expansion of their businesses and employment. This reliance on home equity is prevalent among these entrepreneurs, including many USHCC members, since they have very limited or no access to commercial credit. Many of our nation’s small and minority business owners are now in jeopardy as a result of cascading home values.”
Losses in housing wealth caused by subprime foreclosures will lead to the loss of more than $917 million in property tax revenue. Consequently, this will result in lost funding for schools, which are primarily funded by property tax revenues. By all definitions, this is a crisis that has greatly impacted low- and middle-income communities, particularly Hispanic neighborhoods.
All business owners, regardless of industry or trade, are greatly affected by the state of our national economy. There is no longer much doubt that unless extraordinary and effective steps are taken, the U.S. economy is heading toward a period of stagflation, or as Federal Reserve Chairman Bernanke has acknowledged, even a recession.
“The USHCC supports the scope and objectives of the bill passed last night by the House of Representatives. We look forward to quick action by the Senate and the President to sign it into law in order to bring stability to our housing market,” said Lizárraga.
Additionally, the USHCC strongly supports the inclusion of funding that allows local governments and communities to purchase foreclosed and abandoned homes to rehabilitate them and provide access to low- and moderate-income families. Utilizing such initial modest public investments in neighborhoods and communities across the country has resulted in both near-term and long-term stability for these communities throughout our nation. This provision provides funding of $4 billion for the purchase of such units.
About the United States Hispanic Chamber of Commerce
Founded in 1979, the USHCC actively promotes the economic growth and development of Hispanic entrepreneurs and represents the interests of more than 2.5 million Hispanic-owned businesses in the United States that generate almost $400 billion annually. It also serves as the umbrella organization for 200 local Hispanic chambers in the United States, Puerto Rico, Canada, Mexico, Bolivia and Uruguay.