New Direction for Energy Independence, National Security, and Consumer Protection Act and the Renewable Energy and Energy Conservation Tax Act of 2007

Floor Speech

NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007 -- (Senate - April 04, 2008)

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Mr. WHITEHOUSE. Mr. President, I thank all of my colleagues who have worked so hard this week on the housing stimulus bill. I particularly want to commend my friend from Rhode Island--Senator Jack Reed--for his tireless work on simplifying mortgage disclosures so that mortgage applicants will have in plain English--not fine print or jargon--the most important terms of the loan including the maximum monthly payment possible. This provision was included in the bipartisan substitute amendment and I congratulate Senator Reed.

For months, as America has sunk deeper and deeper into economic distress, hard-working people all over this country have wondered what they are going to do to make ends meet--and why their Government wasn't doing more to help.

For families already strained by rising health care and gasoline costs, and with many struggling to care for an elderly parent or put a child through college, the latest economic downturn is fast becoming the proverbial straw that broke the camel's back.

In my State of Rhode Island, where affordable housing was already in scarce supply, thousands of families face foreclosure, eviction, and an uncertain future. For the 12-month period ending in December 2007, the foreclosure rate in Rhode Island increased by a staggering 238 percent. More than 12 percent of subprime loans in my State were in foreclosure in December 2007. The foreclosure rate among subprime loans in Rhode Island is 15 times higher than the prime loan foreclosure rate.

This is a crisis that strikes at the most vulnerable. As I talked to Rhode Islanders during the recent recess, I heard over and over again about the difficulty of making ends meet in this fragile economy. And as they watch things get worse, they wonder why our Government would do so much to keep the investment bank Bear Stearns from going under, but so little for them and their neighbors.

There are some in this city, and in this building, who believe that if we simply let the markets correct themselves, all will be well. I have great faith in market forces, and I've seen firsthand the power of American industry and American ingenuity to work great good in our country and our world. But we in Government should know by now that market forces need disciplined constraint, and that the American people deserve better than to see their homes swept away by a financial typhoon while Congress stands idly by. They need our help.

Earlier this week, after hard work and good-faith negotiations, Senators Dodd and Shelby reached a compromise on legislation to soften the blow of the residential real estate collapse. In addition to Senator Reed's disclosure provision, the bill now before us includes $4 billion in funding for community development block grants to assist States and municipalities in purchasing and rehabilitating homes that have been foreclosed upon, and $100 million for pre-foreclosure counseling. It also includes Federal Housing Administration reform that will increase the availability of FHA-backed mortgages, offering an alternative to the subprime market for more middle- and lower-income families for whom buying a new home might otherwise be out of reach.

This agreement is a strong start, but it failed to include a provision authored by Senator Dick Durbin of Illinois that would permit bankruptcy judges to modify the terms of a primary residence mortgage. I was proud to cosponsor Senator Durbin's amendment, which included this provision, and was disappointed that the amendment lost a procedural vote yesterday. I plan to support my colleague from Illinois as he continues his efforts to enact this important change to the bankruptcy code.

As my colleagues know, unlike most contracts, including mortgages on vacation homes and family farms, bankruptcy judges cannot currently modify the terms of the very contract most dear to families facing bankruptcy, their principal residence: the place they call home, where they raise their children, know their neighbors, and live their lives.

Simply put, this provision would fix this glaring anomaly in section 1322(b)(2) of the bankruptcy code so that primary residence mortgages are treated like most other secured debts. Like any secured creditor, the mortgage holder would be entitled to adequate protection of his or her property interest during the chapter 13 case. The modification of the mortgage would be limited by market prices and rates and to a repayment term of no longer than 30 years.

Given the cost of foreclosures--which may average as high as $50,000 per incident--it would seem that this amendment to the bankruptcy code would benefit all parties to a mortgage. Passing this measure could help more than 600,000 families facing bankruptcy stay in their homes.

As we continue to consider this housing stimulus package, we have an opportunity to help millions of families weather this crisis and get their lives back on track. I will continue to fight for meaningful relief for middle-class families threatened with the loss of their homes.

Mr. DODD. Mr. President, I am told, and I could be corrected, but I think we have probably completed any amendments to be offered on this legislation at this juncture. I will wait for instruction from the leaders on how they want to proceed, and while we are doing that, I note the absence of a quorum.

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