A report released recently by U.S. Senator Charles E. Schumer detailed the overall financial impact of the subprime crisis and its devastating impact on the housing industry. Schumer, Chairman of the Joint Economic Committee, worked in conjunction with a number of Democratic Senators, including Amy Klobuchar (D-MN), Sherrod Brown (D-OH) and Carolyn Maloney (D-NY), to put the report together. It revealed that the subprime crisis will cost billions of dollars, a burden that is shouldered by homeowners as well as state and local governments and will contribute to declining property values.
 
The report details the importance of foreclosure prevention assistance and how such measures can shore up the economy, potentially saving homeowners billions of dollars – not to mention their homes!. According to the report, more than two million foreclosures will occur throughout this year and next as ARMs (adjustable rate mortgages) reset, raising the monthly mortgage payments of millions of families by hundreds of dollars. Moreover, at least $71 billion of housing wealth in this country will be decimated as property and house values decline as a direct result of foreclosure.
 
The report also forewarns of individual states losing more than $900 million in property tax revenues because of foreclosures with states such as Florida, Michigan, California, Ohio, New York, Illinois, Arizona, Texas and Pennsylvania sustaining the heaviest losses in this arena.
 
According to mortgage industry experts, the report directly points to subprime foreclosures as the reason for $100 billion in losses felt by families around the country.

Proposals that have come about as a result of the report include calls for increased foreclosure prevention counseling, portfolio caps for both Fannie Mae and Freddie Mac.

The foreclosure prevention counseling and help with loan modification may be the solution that works most directly with troubled homeowners behind on mortgage payments. In addition to loan modifications and other stop foreclosure programs, mortgage providers will be able to detail their efforts to help either directly through communication with their struggling homeowners or through intermediaries. In fact, $100 million was appropriated through the Senate for foreclosure prevention groups approved by HUD. Efforts to refinance subprime loans and protect homeowners from foreclosure through amendments in the bankruptcy code are additional points in the reports as sources of assistance for homeowners.

All of these ideas of assistance are geared towards helping homeowners fight foreclosure and get back on their feet; a move that is sure to aid the struggling U.S. economy.