Federal Housing Finance Reform Act Of 2007

Floor Speech

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Mr. SESSIONS. Mr. Chairman, my amendment will provide useful information to middle-class home buyers about the real cost of the $2.5 billion stealth tax included in this legislation, and how it will affect these consumers' wallets.

The amendment requires that the director of the Federal Housing Finance Agency will determine how much the new tax created by this housing fund will increase total costs for home buyers whose mortgages are purchased by housing GSEs.

This information would then be disclosed to the home buyer at or before closing for these mortgages to qualify for future GSE purchase. To ensure that it does not create a costly regulatory burden for mortgage originators, the amendment also provides that additional costs created by this new disclosure requirement would be paid for by the Housing Fund.

I believe that if we are going to pass a new stealth $2.5 billion tax on the middle class to pay for affordable housing, then Congress should, at the very least, be up front about the true cost of this fund with those who are being asked to foot the bill.

My amendment simply provides for transparencies for consumers about the true cost of this new government mandate. I would encourage all my colleagues from both sides of the aisle to support it.

Mr. Chairman, a consistent fact about the free market is that new taxes to build big government programs are always passed on to the consumer. The Housing Fund created by this legislation raids the portfolios of the GSEs for funding. And the GSEs in turn, you guessed it, have to pass the increased costs associated with compliance with this new Federal mandate along to the middle-class home buyers in the conforming loan bracket.

I think it is bad public policy to tie the fate of families that need housing support to the success or failure of Fannie Mae and Freddie Mac's portfolios, as this Housing Fund does. I think that it is bad policy to discourage middle-class home buyers from achieving their American Dream of homeownership by creating a new $2.5 billion stealth tax.

But I think it is absolutely awful public policy to pass this stealth tax and not let consumers know how their pockets are being picked to fund this new big government program brought to us as the courtesy of the Democrat majority in Congress.

I encourage all my Members to support this amendment to provide transparency and funding for the Housing Fund.

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Mr. SESSIONS. Mr. Chairman, I thank the gentleman for yielding, and I do thank the gentleman from North Carolina. So that he is aware, this is unlike any of the other amendments.

This is very straightforward. It offers an opportunity for consumers to see straight up exactly what those costs are that are being passed to them. There is no duplication. There is nothing about this amendment or about the reporting process that would be duplicative. It would be straightforward, and it would be full transparency.

As I recall it, just a few weeks ago the new Democrat majority was intensely interested in making sure that every single person who was a shareholder would have transparency and understanding about the compensation of executives, in the best interests of shareholders.

Now, here we are talking about middle class home buyers who are attempting to understand, to know what costs they are to pay for, whether there is a FedEx package, if there is a notary charge. We are trying to make sure that this money, which would add up to be about $2.5 billion over a short period of time that would be passed to them, they would simply have a statement of exactly what that charge was for.

I think this is good government. I think it is transparency. I do not find any way that it is duplicative. I do not find where there is necessarily additional work. It would be paid for by the fund. The fund that we are saying tonight we are supportive of would simply need to make sure that it becomes transparent to those people who will be paying the money.

I think if you checked out of any restaurant, if you checked out of any store, that you would want to know what you paid for. There would be a line item for it. That is what we are asking for. This is really not very confusing. It makes the bill a little bit better.

It provides transparency. In my opinion, that is still what Congress, both sides, Republicans and Democrats, should strive for, if middle class taxpayers are having to pay for it. I think it makes sense.

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Mr. SESSIONS. Mr. Chairman, I thank the gentleman.

In reply to the gentleman from Georgia, this amendment does not require originators to provide this disclosure to home buyers. It simply says that the disclosure must be given if the originator wants the mortgage to qualify for the purchase by the GSEs.

This is not the first time that Congress has asked that mortgage originators provide blanket disclosures to home buyers, regardless of whether or not the disclosure applies to their specific mortgage. The Cranston-Gonzalez National Affordable Housing Act mandated disclosure to consumers about the mere likelihood that a mortgage's servicing rights would be transferred without regard to whether any specific mortgage servicing rights would actually be transferred. The gentleman, Mr. Frank, was an original cosponsor of the bill in the 101st Congress, and voted in favor of it on August 1, 1990.

Mr. Chairman, I will insert into the Record an example of the precedent for this nonspecific mandated mortgage disclosure requirement supported by our chairman, Chairman Frank.

RESPA Servicing Disclosure

Lender: Indiana Members Credit Union, 4790 East 96th Street, Ste. 120, Indianapolis, IN 46240, Notice to first lien mortgage loan applicants: the right to collect your mortgage loan payments may be transferred. Federal law gives you certain related rights. If your loan is made, save this statement with your loan documents. Sign the acknowledgment at the end of this statement only if you understand its contents.

Because you are applying for a mortgage loan covered by the Real Estate Settlement Procedures Act (RESPA)(12 U.S.C. Section 2601 et seq.) you have certain rights under the Federal law. This statement tells you about those rights. It also tells you what the chances are that the servicing for this loan may be transferred to a different loan servicer. ``Servicing'' refers to collecting your principal, interest and escrow account payments, if any. If your loan servicer changes, there are certain procedures that must be followed. This statement generally explains those procedures.

TRANSFER PRACTICES AND REQUIREMENTS

If the servicing of your loan is assigned, sold, or transferred to a new servicer, you must be given written notice of that transfer. The present loan servicer must send you notice in writing of the assignment, sale or transfer of the servicing not less than 15 days before the effective date of the transfer. The new loans servicer must also send you notice within 15 days after the effective date of the transfer. The present servicer and the new servicer may combine this information in one notice, so long as the notice is sent to you 15 days before the effective date of transfer. The 15-day period is not applicable if a notice of prospective transfer is provided to you at settlement. The law allows a delay in the time (not more than 30 days after a transfer) for servicers to notify you, upon the occurrence of certain business emergencies. Notices must contain certain information. They must contain the effective date of the transfer of the servicing of your loan to the new servicer, and the name, address, and toll-free or collect call telephone number of the new servicer, and toll-free or collect call telephone numbers of a person or department for both your present servicer and your new servicer to answer your questions. During the 60-day period following the effective date of the transfer of the loan servicing, a loan payment received by your old servicer before its due date may not be treated by the new loan servicer as late, and a late fee may not be imposed on you.

COMPLAINT RESOLUTION

Section 6 of RESPA (12 U.S.C. Section 2605) gives you certain consumer rights, whether or not your loan servicing is transferred. If you send a ``qualified written request'' to your servicer, your servicer must provide you with a written acknowledgment with 20 Business Days of receipt of your request. A ``qualified written request'' is a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer which includes your name and account number, and the information regarding your request. Not later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, or must provide you with a written clarification regarding any dispute. During this 60 Business Day period, your servicer may not provide information to a consumer-reporting agency concerning any overdue payment related to such period or qualified written request. A Business Day is any day in which the offices of the business entity are open to the public for carrying on substantially all of its business functions.

DAMAGES AND COSTS

Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals in circumstances where servicers are shown to have violated the requirements of that Section.

SERVICING TRANSFER ESTIMATES

1. The following is the best estimate of what will happen to the servicing of your mortgage loan:

We may assign, sell or transfer the servicing of your loan while the loan is outstanding. We are able to service your loan and we will not have not decided whether to service your loan. or

We do not service mortgage loans, and we have not serviced mortgage loans in the past three years.

We presently intend to assign, sell or transfer the servicing of your mortgage loan. You will be informed about your servicer.

We assign, sell or transfer the servicing of some of our loans while the loan is outstanding depending on the type of loan and other factors. For the program you have applied for, we expect to:

Sell all of the mortgage servicing retain all the mortgage servicing assign, sell or transfer __% of the mortgage servicing.

2. For all the first lien mortgage loans that we make in the 12-month period after your mortgage loan is funded, we estimate that the percentage of mortgage loans for which we will transfer servicing is between: to 25% (or None) 26 to 50% 0 51 to 75% 0 76 to 100% (or ALL)

This estimate does not include assignments, sales or transfers to affiliates or subsidiaries. This is only our best estimate and it is not binding. Business conditions or other circumstances may affect our future transferring.

3. We have previously assigned, sold or transferred the servicing of first lien mortgage loans. or

This is our record of transferring the servicing of the first lien mortgage loans we have made in the past:

Year percentage of loans transferred (Rounded to the nearest quartile--0%, 25%, 50%, 75%, or 100%).

2003: 50%;

2004: 50%; and

2005: 25%.

This information does not include assignments, sales or transfers to affiliates or subsidiaries.

Date: __X

Present Servicer or Lender: Indiana Members Credit Union.

ACKNOWLEDGMENT OF MORTGAGE LOAN APPLICANT

I/We have read this disclosure form and understand its contents, as evidenced by my/our signature(s) below.

I/We understand that this acknowledgment is a required part of the mortgage loan application.

Mr. Chairman, it is clear to me that what we are talking about here is that our friends on the other side simply don't want people to know who is footing or paying the bill. It is so important to get this money to poor people that middle class taxpayers can't be told the truth. It is that simple.

It is not duplicative. It is not anything that requires a great calculation. There would simply be one line that says for every $1,000 of your loan, it is estimated that you are paying X amount. It would be aggregate totals. It would be something that could be calculated very quickly. It is not by a loan, a particular loan; it is by an aggregate total. It could be done. It would be disclosure. It would be the right thing to do.

Mr. Chairman, I think if anybody is confused by this, they simply do not want consumers to know the truth about who is making laws, who is making people pay extra money, where the money comes from and how much money they would be expected to pay themselves. I find that blatantly anti-American not to be open about who is doing what and how much the cost might be.

Americans are entitled to know these sorts of things as consumers. As consumers, they are entitled to know. That is what this amendment is about. If you don't want to be for it, I encourage you to vote ``no.'' But people who are for full disclosure and who want to let the middle class know what they are paying for, who are equally entitled to the American dream, are entitled to know under this amendment.

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Mr. SESSIONS. I thank the gentleman for yielding.

You know, we are once again arguing what, first, is a ``de minimus'' amount of money. Then it turns out to be a lot of money. And now we understand it is really not that much money at all that these consumers are having to pay.

But somebody has to pay the $2.5 billion, and that is a new tax. And it is in this legislation. This money is just not going to come out of anywhere. We do expect if there is going to be money that is going to be owed by somebody, that they ought to know where it comes from. It just doesn't come from home buyers. It will come from Fannie Mae and Freddie Mac shareholders. And excluding them from the decision-making process seems like a significant backward step for shareholder rights. But just a few weeks ago the chairman brought legislation to the floor that would mandate a new, nonbinding shareholder vote on executive compensation.

I think that shareholders and Fannie Mae and Freddie Mac, if they are, in fact, the ones to foot the bill for this new fund, at least deserve a little bit of participation. They ought to understand it and know.

I ask the chairman in the name of shareholder rights and shareholder participation to include the language during any conference negotiations, and to make sure he does the same thing thereto.

The bottom line is that shareholders or middle class home buyers all deserve a right to know how much they are being charged. It is a simple request. The gentleman almost got it right. I think it is an American thing that consumers ought to know what they are paying for, and it is unAmerican not to know what you are paying for.

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