Representative Waters Announces Two Major Legislative Initiatives to Address Growing Foreclosure Crisis

Representative Waters Announces Two Major Legislative Initiatives to Address Growing Foreclosure Crisis

Today on Capitol Hill, Representative Maxine Waters (D-CA)—Chairwoman of the Subcommittee on Housing and Community Opportunity of the House Financial Service Committee-- introduced two major pieces of legislation in response to the nation's growing foreclosure crisis—H.R. 5679, "The Foreclosure Prevention and Sound Mortgage Servicing Act" and H.R. 5678,"The Neighborhood Rescue and Stabilization Act."

"I have been taking a careful and comprehensive look at this crisis, both in my position as the senior California Member of the Financial Services Committee and as Chair of that Committee's Housing and Community Opportunity Subcommittee," stated Rep. Waters. "While these two bills alone will not be enough to deal with the impact of the crisis on individual homeowners, neighborhoods, and communities, I strongly believe they respond to critical gaps in our current federal policy response."

"First, I am convinced that we can no longer rely only on the voluntary actions of the mortgage industry to keep as many distressed borrowers in their homes and in affordable mortgages as needed to address the greatest foreclosure wave since the Great Depression. From the beginning of this debacle, I have been focused on the actions of mortgage servicers[1]—who are the direct point of contact for nearly all borrowers. It is now crystal clear that they just aren't moving quickly enough, or offering borrowers approaching foreclosure sustainable alternatives to losing their homes."

"The fundamental problem is that the mortgage servicers have no legal obligation to make a reasonable effort to keep a borrower in delinquency in his or her home, even where that borrower may have been the victim of a predatory, unaffordable loan. Their only duty is to the investment trust that holds the bundle of mortgages they service, and even though the servicers regularly come before Congress and tell us that their financial incentive is to avoid foreclosure, and stabilize people in their homes, foreclosure rates just keep increasing."[2]

"Enough is enough. While I look forward to the Committee's consideration of Chairman Frank's ambitious proposal to expand FHA loan guarantees to incentivize industry to write down principal on 1-2 million at-risk mortgages,[3] the time has come to add a stick to the carrots being offered to mortgage servicers to do what it takes to stem this crisis now. Simply put, absent a statutory duty of some kind, I am concerned that consumers have little leverage with mortgage servicers in the current crisis, and will continue to lack it in the future. H.R. 5679, the Foreclosure Prevention and Sound Mortgage Servicing Act creates this enforceable legal duty."

Second, even as we work to keep as many borrowers in their homes as possible, it is clear that we must provide help to communities across the country that already face block-after-block of foreclosed and abandoned properties. A consensus has rapidly formed that a sound approach to providing additional economic stimulus to the ailing economy would include making federal resources available for state and local government, in partnership with nonprofits, to purchase these properties and either resell them or operate them as affordable rental properties."

"While I look forward to Congressional consideration of the full range of proposals to assist communities with the growing foreclosed and abandoned property problem,[4] I believe H.R. 5678, The Neighborhood Rescue and Stabilization Act (NRSA) is the soundest approach to investing federal resources."

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