Helping Families Save Their Homes Act of 2009
Floor Speech
HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009 -- (House of Representatives - March 05, 2009)
BREAK IN TRANSCRIPT
Ms. ZOE LOFGREN of California. Mr. Chairman, this important bill gives families whose home mortgages are in distress a better opportunity to come to terms with their lender, to bring their mortgage payments in line with prevailing lending rates in the lending market and with prevailing values in the housing market. This is the same opportunity that owners of vacation homes, investment properties, private jets, and luxury yachts have long enjoyed. I think it's only fair that we offer it now to average families as well. The economic crisis engulfing this country and the world had its start in the housing foreclosure crisis. The Helping Families Save Their Homes Act will begin to address this underlying cause, and it will provide meaningful relief to struggling homeowners.
In developing this legislation, we have benefited at every step of the way from constructive engagement from members on and off the Judiciary Committee, from lenders and brokers, from consumer groups, from bankruptcy judges and trustees. With their help, we've reached consensus on a series of significant changes culminating in the manager's amendment before us today. I should note that the amendment is the Lofgren-Tauscher-Cardoza amendment, and the changes that it encompasses make this a much better bill.
Under the manager's amendment, the homeowner must notify the lender, submit financial records and work in good faith for at least 30 days to try to modify a mortgage outside of the bankruptcy using the Obama mortgage modification plan outlined yesterday. We provide also that, should those efforts not prove fruitful and as a last resort an individual ends up in Chapter 13 proceedings, the court should utilize the Obama mortgage modification plan as a guideline for the court in reviewing and in helping a homeowner to meet obligations.
We also have required that bankruptcy courts will use the FHA appraisal guidelines, repayment plans, and for equal monthly mortgage payments. If a homeowner sells a home while still under a Chapter 13 payment plan, the lender is going to share in the profit, and that's only fair. The closer in time of the mortgage modification, the greater the lender's share, and the manager's amendment actually further increases the lender's share at each point over the period.
Homeowners who engage in bad faith, such as filing for bankruptcy when they could really afford to pay their mortgages, will be disqualified for assistance in chapter 13, and a special Justice Department task force is set up to investigate reports of possible mortgage fraud. These are in addition to improvements already made at earlier stages. The changes are all described in greater detail in a summary that was sent to all of your offices today. I have brought copies of a summary with me today.
In short, we have sought to respond in a reasonable manner to every single concern brought to our attention. We've achieved a balanced reform that will bring meaningful help to families in genuine need without costing taxpayers a dime.
The bill is not going to usher in a rash of bankruptcy filings. In fact, by setting up a homeowner-lender negotiating process that begins well before bankruptcy, it is designed to keep more families out of bankruptcy and out of foreclosure. The number of new chapter 13 mortgage modifications that may result will be far less than the number of foreclosures that will be prevented, and preventing foreclosures is the key. That will benefit not only homeowners and their families but also neighborhoods, their communities, their lenders, and the entire American economy.
It's worth noting that any time there is a foreclosure, the average decline of property values for neighboring property is 9 percent, so this is important to every American to avert these foreclosures.
I thank Mrs. Tauscher, Mr. Cardoza, Mr. Marshall, Brad Miller, John Conyers, and all of the other Members who have worked so hard to improve this bill through the manager's amendment.
I reserve the balance of my time.
BREAK IN TRANSCRIPT
Ms. ZOE LOFGREN of California. Mr. Chairman, I yield myself the remaining time.
Nearly six million households are facing the possibility of foreclosure in our country. And as a result, responsible families who did everything right, who have a traditional mortgage, are facing foreclosure or their neighborhoods are struggling. It's estimated that each foreclosed home reduces the price of the surrounding property--people who did nothing wrong--by 9 percent, or sometimes more. That's when the meth dealers move that is the ``sometimes more.''
This bill takes a number of steps. We've talked about bankruptcy, but that's just a small part of it. It provides a safe harbor for servicers to modify loans. It increases the FDIC insured rate for banks. It makes improvements to the HOPE for Homeowners Program. But it also narrowly affects the exemption for primary residences under Chapter 13.
As has been pointed out, speculators can go into Chapter 13 and get complete relief; it's only the individual homeowner who is not able to get that relief. That's just not fair. There's no way you can possibly defend how that is fair, that the big guys and the speculators get their way, but the individual struggling homeowner does not.
We have worked very hard in these last few weeks to narrow this provision, to listen to every objection that was honestly made, that was credible, and to accommodate it. This amendment is a consensus measure that makes the bill better. I urge its passage.
BREAK IN TRANSCRIPT
Ms. ZOE LOFGREN of California. Mr. Chairman, I must oppose this amendment, and I yield myself such time as I may consume.
The issue it addresses is already addressed in the bill and, again, in the manager's amendment. This would take the issue another step further, and I will say it's a step too far.
This would have the effect of making it practically impossible for a family to move to pursue another job. Families would not only keep their homes, they would be trapped there.
The bill also leaves no room for a homeowner to reap a windfall, either calculated or happenstance, so this amendment is unrequired.
I would note that the Price amendment would turn homeowners really into renters for life. It would remove any incentive for a homeowner who needed to sell a house to seek top value in the sale of that house or even to keep up appearances on that house.
It's a mistake, and it's not what the American Dream is all about.
I reserve the balance of my time.
BREAK IN TRANSCRIPT
Ms. ZOE LOFGREN of California. Mr. Chairman, this amendment would enrich lenders and really gut the bill, damage communities and damage home values. In the bill there is a responsible provision for lenders who have had their mortgages adjusted in chapter 13 to recover on a graduated basis, should property values appreciate at sale. What this amendment would do would be to turn homeowners into renters for life.
I will just point out something else. In bankruptcy law, if you are a speculator, you go in and you buy three condominiums on spec, and you hope you are going to make a fortune on it. But, instead, the market turns. You go into chapter 13, you can get the principal written down, you can get the interest written down but the homeowner in a condo cannot.
I would point out that if condo values rise, the speculator under the Price amendment gets all the value, the lender gets none. Only the homeowner would be made a renter for life. Now, how is that fair in America, a country that's looking for fairness?
I would like to note that currently, if a lender forecloses on a home, it receives none of the home's appreciation. So what is in the manager's amendment, the balanced amendment--I want to credit Mr. Marshall for his excellent work in putting this in--is a vast improvement over current bankruptcy law as it relates to homeowners.
Now, why is this important? Lenders benefit by getting part of their appreciated value and by savings on foreclosure costs. Homeowners share in the value of their home's increasing value, and that's the American Dream.
I would note also that it provides incentives for homeowners who have gone through the tragic circumstance of losing so much and reorganizing in chapter 13 and the stigma that that entails. It provides them incentive to continue to keep up their properties, to paint their houses and to keep up appearances because they have a stake in the future as well, it's not just some remote bank.
Finally, communities benefit because homeowners have this incentive to maintain their properties. So it's important that this measure proceed. As I mentioned earlier, the Price amendment would basically gut this bill and that would be a mistake.
With 6 million homeowners facing foreclosure, that is a disaster not just for those 6 million but for their neighbors. I have seen areas in our country where half the houses are in foreclosure, and I will tell you, it's a nightmare for everyone in that community. The meth dealers move in, the property values decline.
BREAK IN TRANSCRIPT
Ms. ZOE LOFGREN of California. Mr. Chairman, I rise to support this amendment offered by my colleague from Michigan (Mr. Peters).
It was a pleasure to work with him to reach agreement on his amendment, and I appreciate his commitment to ensuring that Americans have credit counseling under the Bankruptcy Code, especially in these difficult economic times.
His amendment, Mr. Peters' amendment, ensures that homeowners will be able to meet their obligations, to obtain credit counseling without risking foreclosure. It strikes the right balance, and it shows real foresight, judgment and skill on Mr. Peters' part, and I appreciate supporting his amendment, and I appreciate his presence here in our body.
BREAK IN TRANSCRIPT
Source