Providing for Consideration of H.R. 5818, Neighborhood Stabilization Act of 2008

PROVIDING FOR CONSIDERATION OF H.R. 5818, NEIGHBORHOOD STABILIZATION ACT OF 2008 -- (House of Representatives - May 07, 2008)

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Ms. KAPTUR. I thank the gentlewoman for yielding to me, and I rise today in reluctant opposition to the rules on both housing bills that are before us because they are not coming up before us in regular order. Neither one is an open rule on such an important subject.

I truly want to thank Chairman Frank and Congresswoman Waters for their efforts to improve these bills as they move forward. But on a matter so serious, the membership should be afforded the respect our offices bestow to represent their people and be allowed to amend and be heard in this body.

Every day, between 7,000 and 8,000 American households lose their homes to foreclosure. Meanwhile, the banks responsible are being rescued by the Federal Reserve, an instrument of our government. Today, the major bills before us to assist with foreclosures will unleash the power of the taxpayer-insured Federal Housing Administration to catch some of the homeowners in its rescue net. But these bills do nothing to hold the lenders and servicers responsible.

Despite the promise of rescue hotlines and Federal and State government compacts, Federal action to help homeowners being foreclosed lacks bite. It is voluntary. It pushes to the FHA what the private sector should be making whole.

The two plans to be considered today, again, ask mortgage servicers to voluntarily, and I underline that word voluntarily, enter into an agreement with the FHA to insure these troubled loans if servicers offer modest loan concessions. The problem: The voluntary aspect of the program leaves homeowners yet again at the mercy of the mortgage loan holder.

Take Countrywide. The CEO of that company had his compensation approach over $200 million, with salaries, bonuses, options, and everything over the last 5 years. Yet the Federal Reserve still rewards Countrywide as one of its privileged primary dealers trading in U.S. Government securities. The FHA rescue plan promises to save maybe 500,000 homeowners, or half a million Americans. That equals maybe 25 percent of the more than 2 million additional homeowners still at risk of foreclosure. Let me ask, is helping 25 percent, perhaps, of homeowners at risk the best America can do? Because the bills are not being considered under an open rule with the ability to amend, we cannot perfect this legislation.

So it's fair to ask, where have these voluntary rescue plans gotten us so far? Housing counselors in my area tell me dozens of servicers refuse even to come to the table and return phone calls, for heaven's sake. Not restructuring the loan is one thing but not picking up the phone is another. When servicers refuse to answer the phone, no degree of local government effort or foreclosure prevention counseling can be effective.

Who is not picking up the phone? Some of these characters:

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CitiFinancial, HSBC/Beneficial, Chase Mortgage, Countrywide, Sovereign Bank, Indymac Bank, Popular Mortgage, GMAC, NovaStar, EMC Mortgage.

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Ms. KAPTUR. I thank the gentleman for yielding.

To continue ..... ASC Servicing, HomeEq, Wilshire, Nationalstar, EquiFirst, Litton Loan, Flagstar, and Saxon Mortgage Services.

In fact, the Federal Reserve still has among its privileged list of primary Treasury security dealers Countrywide, HSBC, and Citigroup, some of the very companies that aren't answering the telephone.

Banks and mortgage servicers should be mandated to disclose contact information, phone numbers, and lay services for their loss mitigation departments. Citizens attempting to do workouts on loans must have these recalcitrant institutions at the table.

In addition, as I've said for months, forthcoming improvements to the bill should include a short-term foreclosure moratorium, perhaps 3 months, to help hundreds of thousands of Americans avoid foreclosure. And, most importantly, Congress should vote again on allowing judges the flexibility to modify the terms of mortgage loans in bankruptcy court proceedings. Frankly, the Senate should filibuster on this issue. In other words, do for the homeowner what the Federal Reserve has done for the big banks.

Without enacting tougher legislation, a ``no'' vote on this rule and the one to follow will allow for a more effective set of bills to come before us that will really address the comprehensive foreclosure needs of the American people. I'm glad to see the progress we've made, but we could go so much further.

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