Providing for Consideration of Senate Amendments to H.R. 3221, Foreclosure Prevention Act of 2008
PROVIDING FOR CONSIDERATION OF SENATE AMENDMENTS TO H.R. 3221, FORECLOSURE PREVENTION ACT OF 2008 -- (House of Representatives - May 07, 2008)
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Mr. WELCH of Vermont. Mr. Speaker, House Resolution 1175 provides for consideration of the Senate amendments to H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008.
The rule makes in order a motion by the chairman of the Committee on Financial Services, Mr. Frank, to concur in the Senate amendments with three House amendments. The rule provides 3 hours of debate on the motion, with 2 hours controlled by the Committee on Financial Services and 1 hour controlled by the Committee on Ways and Means. The rule also provides for a division of the question on the adoption of the three House amendments listed in the Rules Committee report.
Mr. Speaker, I think we all know why this rule and the underlying bill are so important. Millions of Americans are confronting the growing prospect of losing their home. Hundreds of thousands, if not millions, have already lost their home in a foreclosure epidemic that is the legacy of the subprime mortgage crisis.
According to recent reports, the most severe real estate recession in decades is going to continue to weigh down the economy, the pace of foreclosures is going to continue to rise, and homes continue to lose their value at increasing rates. This foreclosure epidemic has spread to virtually every major city in the United States.
What the Committee on Financial Services has done here is brought us a bill that addresses this problem directly. It's not a bill that intends to lay blame. There is plenty of that to go around. It's a bill that's intended to solve a problem.
Here are some of the sobering facts about the problem:
The number of homes entering foreclosure in the first 3 months this year was double the same period as last year.
One in every 194 homes received a foreclosure filing in the first quarter of this year.
And home prices are down, on average, 12.7 percent, which is basically the first time that's happened since the Great Depression in the early 1930s.
As the foreclosure trends intensify, the problem can only get worse. As foreclosure signs go up in neighborhoods, the value of the property in that neighborhood declines, even if the creditworthiness and the ability to pay of the homeowner is as strong as ever.
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Mr. Speaker, this legislation is about, as I mentioned, solving a problem. It creates opportunity for the lenders and the mortgage servicers to minimize their loss; it provides an opportunity for homeowners to stay in their homes, but it shares the pain as well as the opportunity. In order for lenders to take advantage of the opportunity presented in this bill, they are going to have to write down the value of the loan consistent with the current appraisal value. In order for homeowners to have an opportunity to participate in this program, they are going to have to give up the equity that they thought they had, including any moneys they had paid in downpayments.
House Resolution 1175 provides for the consideration of three House amendments to the Senate amendment to H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008.
Amendment No. 1 includes H.R. 5830 regarding the FHA refinancing, H.R. 1852 regarding FHA modernization, H.R. 1427 regarding government-sponsored entity reform, those being Fannie Mae and Freddie Mac, and H.R. 1066 regarding community development investments, among other bills. Each
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piece of legislation in this amendment has already been passed by the House so we are really going over work that this entire body has considered before, or it has been rigorously debated and amended through the committee process in Financial Services and Ways and Means.
Amendment No. 2 includes H.R. 5720, the Housing Assistance Tax Act of 2008 under which middle-class families would be eligible for a loan of up to $7,500 toward the purchase of a new home, and homeowners filing jointly would receive an additional deduction from their property taxes of $700. States will also receive a temporary increase in low-income housing tax credits and $10 billion of additional tax exempt bond authority for low-interest loans to build low-income rental housing and to refinance certain subprime mortgages.
One of the underlying causes of the subprime crisis was that more and more Americans who wanted to rent couldn't and had to get themselves housing by getting into loans they couldn't afford.
Amendment No. 3 is a bipartisan amendment offered by Congressman Miller and Congressman LaTourette regarding the preemption of State laws regulating foreclosure.
The centerpiece of this legislation is H.R. 5830, the FHA Stabilization and Homeownership Retention Act included in amendment No. 1. That bill would enact a voluntary program, voluntary, for homeowners and lenders, and I emphasize voluntary, nothing is being forced on anyone except the opportunity to work this out. The process would begin with a homeowner or servicer of an existing eligible loan with an FHA-approved lender, and the FHA-approved lender would then determine the size of the loan that meets the requirements of the program and that the borrower could reasonably repay. The plan targets a group of homeowners who would be able to stay in their homes if they had a reduction in principal and monthly servicing charges.
The Congressional Budget Office says that this legislation could save 500,000 mortgages from foreclosure. Other estimates put that number much higher, at over a million.
Just as important as keeping Americans in their homes, this legislation protects American taxpayers. The government's liability under this program is limited and only applies if a borrower defaults and the amount recovered in foreclosure is below the outstanding debt still owed. This is a program that will be paid for largely by the folks participating in it and benefiting from this option as an alternative to foreclosure, and that is through a series of financing and copayments that will be assessed at the time of closing as the life of the loan continues through fees for a period of about 5 years.
There are going to be about $300 billion made available under this bill for guarantees, but the CBO scored the legislation as having an outside risk to taxpayers of about $2.4 billion. And I would like to have my colleagues think about that for a moment in the context of the $29 billion that was made available to back the rescue of the investment banks when Bear Stearns collapsed.
The biggest cost to the taxpayer would be to let the economy unravel, to let neighborhoods decay, and to let thousands if not millions of homes go into foreclosure.
Mr. Speaker, H.R. 5830 and other critical parts of this legislation provides an avenue to stability, to restoring economic stability to our neighborhoods, to our working families in this country, and to our lenders. We all thank the excellent leadership of the Committee on Financial Services and the Committee on Ways and Means for working together, Republicans and Democrats, to bring this legislation to the floor for consideration.
I reserve the balance of my time.
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