Helping Families Save Their Homes Act of 2009

Floor Speech

HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009 -- (Senate - May 04, 2009)

BREAK IN TRANSCRIPT

Mr. SCHUMER. Mr. President, I will not offer my amendment at the moment. We are still trying to negotiate it. But I want to discuss an amendment I will offer, hopefully, with agreement. That is an amendment that would require the Secretary of the Treasury, in consultation with the Secretary of HUD and other housing-related Federal agencies, to develop a program to address the rising defaults and foreclosures in multifamily properties.

The program is necessary because the same excesses that occurred in the single-family mortgage market also occurred in the multifamily mortgage market, leading to buildings that are significantly overleveraged with rent rolls that are unable to support basic operational expenses and maintenance. The tenants of these buildings had absolutely no input into the misguided decision of the owners and lenders who mortgaged the property beyond supportable levels, but they are the ones who will face the consequences of this investment and foreclosure, as owners are unable to meet monthly payments and maintain the properties.

In New York City alone, it is estimated that 60,000 units of multifamily housing are at risk of disinvestment and foreclosure. We have similar problems in smaller ways in many upstate cities as well. We have seen buildings in New York where in order to make the loan underwriting work, lenders estimated tenant turnover rates that would double or triple the neighborhood average, rent increases that were not even legal under local law, and expected maintenance costs that were actually less than half of what the owner spent in previous years. This kind of basic underwriting malpractice has left tens of thousands of families in New York State and other States vulnerable. We are not the only ones. New York has the eleventh highest multifamily delinquency rate in the country, according to a recent Deutsche Bank report.

The 15 States with the highest multifamily delinquency rates are not concentrated just in the Northeast or on the west coast. This is a truly national problem. I ask my colleagues to listen because their State may be among the one-third, or close to it, the 15 out of 50. They are Tennessee, Georgia, Florida, Michigan, Nevada, Texas, Illinois, Ohio, Indiana, Connecticut, Oklahoma, New York, Kentucky, Missouri, and Mississippi.

While I am strongly supportive of the administration's efforts to help families across the country obtain loan modifications and other financing options, a similar effort to protect tenants of multifamily properties must be made. It must be made in a way to protect the tenants first and foremost and not let the developers and the investors, who did all the wrong, get away with wrongs.

Housing experts in New York have begun to examine options to assist these buildings. There are a number of different ways that might be effective in addressing this problem. So the bottom line is, we need Federal expertise, leadership, and support to help determine the best course of action and implement a program across the country to ensure that innocent tenants do not have to pay the price for the poor decisions of landlords and lenders.

This should be an easy amendment to support. I am not asking for any new money. We are certainly not asking to bail out any of the bad actors or even giving specific directions to the Treasury Department to take this approach or that one, although I have talked to the Secretary of HUD about this problem and, in fact, we worked on some problems related to this when he was the head of the HPD, the housing department in New York City.

What we are doing in this amendment is simply asking the Congress to direct Treasury to examine this problem and develop a program to address it in whatever way they determine best. My hope is that the Treasury will consult with HUD. It is unfair that tenants of multifamily rental buildings are being left out in the cold while single-family homeowners receive focused attention from their agencies. Single-family homeowners should but so should those in multiple developments.

I urge my colleagues to support the amendment.

I suggest the absence of a quorum.

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