New Direction for Energy Independence, National Security, and Consumer Protection Act and the Renewable Energy and Energy Conservation Tax Act of 2007--Continued
Floor Speech
NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--Continued -- (Senate - April 03, 2008)
BREAK IN TRANSCRIPT
Mr. SCHUMER. Madam President, I am proud to rise in support of the amendment offered by the Senator from Washington, the Senator from Pennsylvania, the Senator from Ohio, and myself, and I first wish to thank Senator Murray for her leadership on this issue. This is crucial, and when Senators CASEY, BROWN, and I sent her a request to include this money first in the appropriations bill and then in the omnibus bill, Senators DODD and BOND offered an amendment for another $100 million, and by the time we got through with conference, $180 million was offered. So I thank all my colleagues. We also have Senators CLINTON, MENENDEZ, and KERRY as cosponsors of our amendment.
Madam President, as you know, we are in the midst of a massive spike in mortgage delinquency and foreclosures. Housing prices are going down at record levels. We haven't seen housing prices go down this much since the Depression. Our economy, the national economy, is heading south. Yet where is the President? The President has been in Bucharest, both literally and figuratively. The President is literally in Bucharest today, but he has been in Bucharest for months when it comes to the economy and housing. He is nowhere to be seen here.
Foreclosure filings are soaring. They are up 57 percent in January. From December to January alone, foreclosures increased 8 percent. The 57-percent figure is over the year. Home foreclosure filings topped 1.3 million in 2007, and more than 2 million are likely now. We are all more than aware of the havoc this has wreaked in neighborhoods, on Main Street, on Wall Street, and throughout the Nation and even the world. So it is amazing that with all of these problems rippling out from housing foreclosures, a simple addition could greatly ameliorate the problem, and that addition is mortgage counselors. Why, you ask? Why should a mortgage counselor help solve not just problems of individual foreclosures but of declining home prices and declining economy and financial ripples throughout the world, in London and Shanghai? The answer is simple: The majority of those in foreclosure do not have to have their houses foreclosed upon. They have the resources, and the price of their home is such that a simple refinancing would work.
In the old days--when banks were the only issuer of mortgages, they issued them and held them--none of this would have happened. The mortgage counselor from the bank would have gone over to the homeowner and helped him or her rework this. Madam President, 60 percent of those in foreclosure or about to go into foreclosure are prime borrowers; most of them, the majority, are in home refinancings, not new homes; and many of them were duped through no fault of their own.
A mortgage counselor on the scene, provided there are dollars to refinance, can help that homeowner refinance.
I ask unanimous consent that Senator Klobuchar, the Presiding Officer, be added as a cosponsor of our amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SCHUMER. I thank her for always being on top of things.
In any case, a mortgage counselor could easily do the job in so many cases, but there are none around. Foreclosure counselors are skilled and work. There are groups throughout the country that do this and do it well, with very little waste and much dedication. That is why Senators CASEY, BROWN, and I went to Senator Murray and asked her to put this in the omnibus bill. That is why she did it, and that is why Senators BOND and DODD added additional money in an amendment. We need these people.
I wish to tell a story. I have told it before on this floor, but I want to make sure people hear about it. It shows the need for counselors. It is about Frank Ruggiero, a homeowner from Ozone Park in Queens. Frank is a retired subway motorman. He had a pension of $28,000 a year, Social Security of $11,000 a year--$39,000 income a year. He lived in his nice little brick house with a mortgage of $1,100 a month or about $12,000 a year and happily paid the mortgage for 16 years of the 30-year mortgage.
Then Frank got diabetes. He needed $50,000 for some kind of treatment that his medical plan would not pay for. Instead of going to the bank, which was Frank's mistake--because banks have not caused this problem; it is the independent mortgage companies, unregulated, that caused it--he saw an ad in the paper for one of these fiends--they are not all fiends but this person was--
that said ``get quick cash; refinance your home.''
Frank called, and he came over. Frank said: How much more will I pay?
He said: You will pay $100 more in January.
And Frank says: I can easily afford $1,200 a month to cure my diabetes. That is worth it. He signed a new 30-year mortgage and sure enough, his mortgage only went up to $1,200 in January.
What he was never told was that the following January his mortgage would go up to $3,900 a month. That is easy math. That is about $47,000 a year. Frank's total income was $39,000 a year. Even if he didn't pay one nickel for the whole year for any food or heat or taxes, he couldn't pay it.
What happened? This more relates to the amendment of my colleague from California--the mortgage broker was paid a huge commission to dupe Frank. He duped him legally because there are no regulations. It said on the big document Frank signed, on page 23--I am a lawyer, but I couldn't understand it--6 points above LIBOR after 4 months, after this, after that--it said the mortgage would go up that much, but no right person would understand it. It wasn't in plain English, and it wasn't available. The mortgage broker made a huge fee, walked off into the sunset, and Frank was about to lose his home.
The irony is, Frank was a prime borrower. He had never missed a payment on his mortgage, he had never missed a payment on his credit card. His FICO score was above 700. He easily could refinance. Frank is a good customer for a lending institution. But there was no one to help him. There was no bank. It was a mortgage broker, independent, who got money from a mortgage company, independent, both unregulated. That relates to the amendment of my friend from California. They are off into the sunset with their profits, and Frank is stuck and no one is there. The mortgage company didn't hold the mortgage, they chopped it up in 40 pieces and gave it to some investment house that sold securities, and it is now scattered among thousands of investors in little tiny pieces in different degrees of reliability.
So Frank is out there alone. If there were a mortgage counselor on the scene, that mortgage counselor could easily help Frank refinance.
You say, where would they get the money for refinancing? Good news; finally, after months of prodding by myself and Senator Dodd and others, Fannie Mae and Freddie Mac have made $200 billion available for these kinds of mortgages.
But the dollars are not going to walk over to Frank's house in Ozone Park, Queens, and say: Here we are. You need a mortgage counselor. And that is what the amendment of the Senator from Washington and the Senator from Pennsylvania and the Senator from Ohio and my amendment does. It simply provides more mortgage counselors. It is not huge science. You do not need a Ph.D. in mathematics or an accounting degree to be a mortgage counselor. You have to take a little course and learn it. It is easy for the various groups that have done this for years but were not faced with a flood of foreclosures to do it again. We could probably prevent about 50 percent of all the foreclosures that are about to happen, maybe even more, because 60 percent are prime borrowers, and even some of the nonprime borrowers could be helped by this, depending on the value of the home and the cost of their mortgage and the mortgage processing agreement.
That is all we want to do. In this package originally that we offered about 3 weeks ago, there was $200 million. That is not enough. Senator Murray and I and others wanted to ask for $500 million, but we were asked by the majority leader to keep the cost down so we offered $200 million. Madam President, $200 million is not enough. We need more than that.
We did appropriate $180 million in the omnibus bill, as I mentioned before, that Senator Murray put together--at least her part of it. Now there is talk we don't need the $180 million; they have not even spent that. Why give them more?
Here is a letter. I ask unanimous consent the letter be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
April 2, 2008.
Hon. CHRISTOPHER DODD,
Chairman, Senate Committee on Banking, Housing and Urban Affairs, U.S. Senate, Washington, DC.
Hon. RICHARD SHELBY,
Ranking Member, Senate Committee on Banking, Housing and Urban Affairs, U.S. Senate, Washington, DC.
DEAR CHAIRMAN DODD AND RANKING MEMBER SHELBY: As you consider the current housing stimulus legislation we urge you to restore essential funding for foreclosure prevention counseling. We respectfully request that you fund this program for not less than $200 million as was initially proposed by Senator Reid in S. 2636.
As you well know, the nation is experiencing a serious spike in mortgage delinquency and foreclosures. In 2006 more than 1.3 million homes were in default, up 42 percent from the year before. Foreclosures are expected to be greatest in 2008 when one in three loans is predicted to end in default as a result of mortgage payment resets on adjustable rate loans. The crisis is widespread and not just confined to the urban housing market. Increasingly, rural borrowers are subject to harsher prepayment penalties and targeted lending discrimination so the prosperity and stability of rural counties, like their urban and suburban counterparts, is becoming jeopardized.
The FY 2008 HUD Appropriations Act provided $180 million for use by the Neighborhood Reinvestment Corporation to provide mortgage foreclosure prevention counseling. Neighborhood Reinvestment received applications for $340 million in grants to combat the foreclosure crisis. With only two weeks to apply for funds, demand was nearly twice the $180 million that Congress appropriated for these mitigation activities. Several states were underrepresented in the applicant pool, in part because those states had not seen high rates of foreclosure up to that point. Now, however, many of the states that did not apply or receive an initial grant have seen a dramatic increase in home foreclosures and are in desperate need of these supplemental counseling resources.
In particular, there is a need to expand the capacity of housing counselors to assist delinquent homeowners with accurate and honest information and options, budget and workout plans, loan modifications, refinancing or responsible sales of the residence. It is also essential given the nature of this crisis to ensure an ongoing, adequate level of support for mortgage foreclosure activities.
We urge you to fund the foreclosure mitigation counseling program at no less than $200 million in order for housing counselors to keep pace with rising rates of foreclosure in rural and urban neighborhoods. Thank you for your consideration of this important request.
Sincerely,
PEG MALLOY,
President, NNA.
DAVID C. BROWN,
Executive Director, NNA.
Mr. SCHUMER. It is a letter dated yesterday, to Senator Dodd and Senator Shelby, signed by about 100 organizations that do this, saying the following:
We respectfully request that you fund this program for not less than $200 million as was initially proposed by Senator Reid in S. 2636.
They said they have received applications for $340 million in grants, twice the $180 million Congress appropriated. Several States were underrepresented in the original applicant pool because they had not seen high rates of foreclosure, but now many of them have applied. Of the $180 million, $130 million has already been spent in a short 6 weeks. The only reason the rest has not been spent is they are keeping it aside for a very rainy day. They could spend that in a minute if we were to ask them to in report language, should this bill get that far, which I hope and pray it does.
So we need the money. It is not much money. We are putting $4 billion in for CDBG. That is worthy, but it is not as important as mortgage counselors. We are putting $6 billion in for the loss carryback provisions, the FOLs, to help homebuilders. We can't afford a needed $100 million more for mortgage counselors, who do more good to prevent foreclosure and provide more bang for the buck than any other part of this bill, bar none?
Why the $100 million was cut out--I was told they said they didn't need it. This letter proves conclusively they need it. It is now in the Record. I urge my colleagues to look at it. We desperately need it.
I hope we will have bipartisan support for this amendment. Senator Bond, who has been a leader on these issues, supported the amendment, with Senator Dodd, to put in the original $200 million. This is hardly a partisan issue. This is not a bill that costs $15 billion. Another $100 million is not
going to make that much difference, especially when we are doing $6 billion for the loss carrybacks, and $4 billion for CDBG. I urge my colleagues to support it. It is a much needed amendment that will do tremendous good. It will help the Frank Ruggieros and the millions of others like him to keep their homes. It will prevent housing prices in their neighborhoods and in the country from declining more than they have to. It will stabilize mortgage markets and thus stabilize many of our largest banks and institutions, both here and abroad.
So this little amendment is like Mighty Mite--it is small, it is at the center, but it has tremendous power to ripple outward and affect us positively.
I urge my colleagues on both sides of the aisle to support it so we might strengthen this bill.
I yield the floor.
Source