This story was written by freelancer Hannah Golden
U.S. Sen. Jeff Merkley@@http://www.merkley.senate.gov/@@ presented his view on the economy and what steps our country must take to improve at a Thursday lecture in the EMU Ballroom.
“The greatest opportunity for improvement,” he said, “is by revamping the housing market and mortgage industry.”
“Owning a home is the most powerful stabilizing factor (in individual economics). While a homeowner may sign a mortgage to pay a certain amout a month for 30 years, a renter’s monthly fee will increase at the mercy of ever-rising rates. Down the road, the homeowner is much better off financially, with a huge asset to bolster his equity,” said Merkley.
The EMU ballroom held an interesting mix of people for Merkely’s lecture, “Rebuilding American Homeownership.” It drew a crowd ranging from 18 to 80 year olds — students, faculty, residents and Eugene residents were all in attendance.
The benefits of owning a home have been overshadowed. As Merkley put it, the process of paying off a mortgage has “turned the American Dream into a nightmare.”
In 2003, banks began selling an unprecedented number of subprime mortgages. Sales soon outpaced that of prime mortgages within a couple of years.
“Eleven million families are underwater in America,” Merkley said, adding an expected “four to eight million more foreclosures.”
While some believe our economy is out of the woods, he warned that if bad-loan practices continue, Americans may not be through the worse of it.
Merkley was optimistic, however. He said he has been working to develop a plan to pull struggling families to safety. His proposal aims to close loopholes that allow banks to sell born-to-lose loans to Americans.
Merkley’s proposal offers three different approaches for borrowers to replace their current subprime mortgages with stable, manageable alternatives. Based on the results of a recent study, Merkley claims that refinancing bad loans would bring Americans out of the danger zone in three years as opposed to seven.
Announcing his proposal, Merkley was supported with shouts of “yes!” and vigorous nods.
The audience, like Merkley, seemed optimistic.