REVITALIZE Act of 2016

REVITALIZE Act of 2016 was a legislative proposal introduced in the final months of the 114th United States Congress. The bill, formally titled the "Revitalize Act of 2016," sought to amend the Bankruptcy Code to provide relief for certain homeowners and to establish a grant program for municipal governments. It represented a legislative effort to address economic distress in communities still recovering from the Great Recession and the Subprime mortgage crisis.

Background and legislative history

The bill was crafted against a backdrop of prolonged economic recovery in many American cities, particularly in the Midwestern United States and the Rust Belt. Its chief sponsor, veteran Congressman John Conyers of Michigan, represented Michigan's 13th congressional district, which included areas of Detroit deeply affected by municipal financial crises and widespread foreclosure. The legislation was influenced by earlier proposals like the Helping Families Save Their Homes Act and ongoing discussions around the Puerto Rico Oversight, Management, and Economic Stability Act. It was introduced as H.R. 6361 on November 17, 2016, and was referred to the House Judiciary Committee, where Conyers served as the Ranking member. The late introduction in the lame-duck session following the 2016 presidential election significantly constrained its legislative pathway.

Provisions of the act

The act contained two primary titles. Title I aimed to amend Chapter 13 of the Bankruptcy Code to allow for the modification of certain mortgages on principal residences, a power often referred to as a "cramdown." This provision sought to give bankruptcy judges authority to reduce the principal balance of a home loan to the property's current market value, similar to protections available for other assets like investment property. Title II proposed establishing a grant program within the Department of Housing and Urban Development (HUD) to assist local governments, specifically those with high rates of vacancy and property tax delinquency, with the costs of demolishing blighted structures and revitalizing neighborhoods.

Support and opposition

The bill garnered support from a coalition of consumer advocacy groups, civil rights organizations like the NAACP, and labor unions such as the AFL–CIO. Proponents, including think tanks like the Center for American Progress, argued it was a necessary tool to help families avoid foreclosure and to address the legacy of the housing bubble in cities like Cleveland and Baltimore. Opposition was voiced by the financial services industry, including the American Bankers Association and the Mortgage Bankers Association, which contended that the cramdown provision would increase mortgage interest rates and create uncertainty in the secondary mortgage market. The bill also faced political opposition from many members of the Republican majority in the House, who favored alternative approaches to housing policy.

Legislative outcome and subsequent action

The REVITALIZE Act of 2016 did not receive a committee hearing, a markup, or a floor vote in the House of Representatives. It effectively died with the adjournment of the 114th United States Congress. Similar policy ideas, however, have re-emerged in subsequent legislative sessions. For instance, provisions for addressing blight and community development have appeared in bills like the Housing, Opportunity, Mobility, and Equity (HOME) Act and discussions surrounding the American Jobs Plan. The concept of bankruptcy cramdowns for primary residences remains a periodic topic of debate among members of the Senate Banking Committee and the House Financial Services Committee.

Impact and analysis

While not enacted, the REVITALIZE Act served as an important marker in ongoing policy debates about federal responses to urban decline and housing insecurity. Legal scholars from institutions like the University of Michigan Law School have analyzed its proposed bankruptcy changes as a test case for expanding debtor protections. Economists have debated the potential macroeconomic effects of widespread mortgage principal reduction on the Federal Reserve's monetary policy and financial stability. The bill's focus on demolition grants also influenced later federal initiatives, such as those administered by the Treasury Department's Hardest Hit Fund, demonstrating how legislative proposals can shape administrative action even without passage.

Category:2016 in American law Category:United States proposed federal legislation Category:Housing in the United States