Basically, What You Have Done on the Bill is It Says: Effective on the Date of the Act There Are Rescinded

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Ms. WATERS. Madam Chair, my amendment would mandate that the Secretary of Housing and Urban Development and the Secretary of the Treasury conduct a study on the negative impacts of underwater mortgage loans, or loans where the borrower owes more than the house is worth, on the housing market and the economy of the United States and report those findings to Congress. Importantly, the report would also include recommendations to Congress on how to mitigate the effects of these underwater mortgages.

Before I go any further talking about these underwater mortgages, I think it is extremely important for me to help everyone understand that my friends on the opposite side of the aisle are moving to eliminate all of the programs that we have worked so hard to develop; good, strong public policy to assist homeowners of America in a number of ways.

They are eliminating this FHA program that will assist with refinance on homes that are underwater. They are eliminating the HAMP program that we are going to hear more about. They are eliminating the neighborhood stabilization program, commonly referred to as NSP. And they are eliminating the program for homeowners who find themselves out of a job who would be able to borrow and, of course, to pay back the money that is loaned to them--they cannot afford to pay their mortgages because of the loss of their job.

So while they are eliminating all of the programs that many of us have worked so hard to develop--in the former Congress, I was the chair of the Subcommittee on Housing and Community Opportunity, and so I know these programs very well. Not only do I know these programs very well, I understand very well what has happened here in America that has caused homeowners to be in the situations they are in now.

We have a situation that occurred that created this crisis with the subprime meltdown. We had loans that were initiated in this country that were exotic loans, loans that were teaser loans, no documentation loans, liar loans, loans that reset. People were encouraged to sign up for mortgages that they did not understand.

Now we have millions of Americans, really through no fault of their own, and I have said it once and I will say it again: That all of a sudden homeowners didn't decide that they were going to default, that somehow they weren't going to pay their bills. It certainly didn't happen like that. It happened because of what I just alluded to, all of the tricks and the fraud that were perpetrated on American homeowners who were simply trying to live the American dream.

We don't have the numbers in committee any more or on this floor. My friends on the opposite side of the aisle are in control. They have the majority, and they are going to eliminate the programs. We have made every argument possible that you can make in committee to try and hold on to these programs. As you have seen on the floor today, we have the gentlelady from New York reminding them how many homes they have underwater. And, of course, they know because they are getting the calls, just as we are getting the calls, from homeowners begging for assistance. So while we won't be able to stop them, I'm trying to make sure that at least we do this study so we can help bring to light what has taken place and how these underwater mortgages pose a severe threat to our economy.

If you owe more than your home is worth, you can't pick up and move if you get a new job. You're stuck. That impedes our economic recovery. Likewise, you can't move if you want to go attend school somewhere. And you can't move in order to care for an elderly parent.

The chief economist for First American CoreLogic noted last month that negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners. Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come. The FHA refinance program is a modest step to address the problem of underwater mortgages. This program would provide that if banks agree to at least a 10 percent principal write-down for the borrower, the borrower can refinance into a FHA loan. Only borrowers current on their mortgages, not those in default, qualify for the program. So this study will help people to understand the impact it is having. I ask for an ``aye'' vote on my amendment.

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Ms. WATERS. Madam Chair, I move to strike the last word, I suppose.

If we terminate a program, we should understand the impacts of such a termination, and so this is relevant.

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Ms. WATERS. This is the point of order.

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Ms. WATERS. The point of order indicates that this is not germane. I am maintaining that this is germane because if we terminate a program, we should understand the impact of such termination. I believe that does speak to the point of order.

The Republicans say this program doesn't work. So our regulators should suggest to Congress what they think will work. This is just a study. This is not a new program or an extension of the FHA short refinance program.

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Ms. WATERS. I do think this amendment is germane, for a number of reasons. The gentleman talked about the fact that this country was almost brought to the brink of total disaster because of this subprime meltdown. He pointed to things, that have already been identified, that we can put squarely on the shoulders of the servicers who are responsible for the management of these mortgages after they have been packaged, securitized, and then sent on their way to be collected on.

This gentleman is talking about the fact that many of these servicers when they are trying to collect on these mortgages can see that fraud has taken place, but they do nothing about it. They can see that amendments have been slipped in that the homeowners did not know about. They can see that sometimes the signature does not even belong to the homeowner, but they continue to try and collect on these mortgages.

I think that this amendment is germane. I would ask that the Chair rule in favor of this amendment. It is time somebody paid a price for what has been done to the American public.

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Ms. WATERS. Thank you very much.

Madam Chair, I rise to support the amendment. I'm opposed to the point of order. I think it is absolutely germane. Not only do we have a bill before us that will eliminate taxpayers' ability to have their homes that are underwater refinanced; this also impacts their taxes. They will continue to have to be taxed on those homes at the same rate. And so here we have before us the Universal Homeowner Tax Relief Act that would impact 30 million Americans nationwide.

And I must add that if we can, in this House and in this Congress, give tax breaks to the richest 1 percent of Americans in the way that we have done, certainly we can support these homeowners who are underwater, these homeowners who have been tricked into mortgages that they didn't understand, these homeowners who are the victims of fraud. And I think this is germane.

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Ms. WATERS. Madam Chair, I move to strike the last word.

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Ms. WATERS. Madam Chair, I rise because I want to make sure that the chair of our committee, who just took the floor, understands that we understand the bill. When our chairman first took the floor to talk about what this bill is and what it is not, he said he did not think that we really understood what the bill was all about. I would like to assure you that the Members on this side of the aisle understand this legislation. I would like to assure you that those of us who work on the Financial Services Committee, who put these bills into operation, who organized these bills, who presented these bills, who got these bills passed into law to help homeowners, understand what is now happening to them.

We understand that the bill before us would eliminate this program. This is an FHA program that's designed to provide refinance opportunities for those homes that are underwater.

What do we mean when we say ``underwater''? We mean that when middle class homeowners, hardworking citizens went and signed for that mortgage where they were paying $250,000, $300,000, $400,000 for a home, they signed that mortgage, that was supposed to be the value of that home. That's what it was assessed at at the time. That was what it is supposed to be worth.

Now, because of this crisis that we are in, the subprime meltdown that we are in, this economic difficulty, these homes have lost their value. They are no longer the homes that they signed that mortgage for. The value has changed. That $400,000 home, that $300,000 home that middle class citizens were now buying is 35 percent less, or 50 percent less in some areas.

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Ms. WATERS. No, I will not yield.

These homeowners are saying, Will you please help me? Will you please do something about the fact that I am working every day, paying a mortgage amount for a home that's 35 to 50 percent less than what I signed up for? Will my government please help me? This is not fair. They're simply saying, Can't you do something? And we said, Yes. We put into play legislation, FHA, that would help to refinance these homes. Let's get the amounts right.

I now yield to the gentleman from Alabama, because I don't want to deny my friend the opportunity to have his say.

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Ms. WATERS. Reclaiming my time, I am focused on the homeowner who was supposed to be protected by the regulators that have been appointed and given the jobs of regulation so that they could make sure that our consumers are being treated fairly. We failed them. We let them down. We allowed them to get into mortgages where fraud was quite evident. We did not do the job. And so now they have these homes that are underwater, and they're saying, Help us. And we did. That's what this FHA legislation would have done, helped to refinance so that they could lower their mortgage payments.

Now, my friends on the opposite side of the aisle are saying to the taxpayers and to the homeowners, No, we're not going to help you. We know your home is underwater. We know this information. We know what the servicers have done to you. We know that you are working every day to pay a mortgage for a home that you thought was worth an amount that is no longer so.

So we are saying please don't do that. We're saying please don't do that. Don't strip the homeowners of this opportunity to refinance this home.

In addition to stripping the homeowners of this opportunity, the other programs that you are going to hear about, the other three programs, the HAMP program, the NSP program, the program for homeowners who have lost their jobs who simply want a loan, we're saying no to all of this. We're saying, No, homeowners, we're not going to help you.

I yield back the balance of my time.

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Ms. WATERS. Madam Chair, I have an amendment at the desk.

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Ms. WATERS. Madam Chair, I ask unanimous consent that amendment No. 6 be modified with the modification that is at the desk.

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Ms. WATERS. Madam Chair, this amendment that I've worked on with my colleagues on the opposite side of the aisle is simply about transparency. It is simply about making ourselves available to the homeowners who are trying to get some help because they are under water. This amendment would simply say that the program is no longer in existence and that you may call us to help you to get to your lender or to get to your servicer in some way.

It is certainly not what I would prefer to have to do, but I understand we're going to lose. The Members on the opposite side of the aisle have made up their minds, and they have decided that this is important and that this is what they're going to do.

So I would simply like our citizens to know that this program that they may have started to hear about is no longer in existence and that, if they call us, we will agree that we will try and help them, in some modest way, to get to their servicers or to their lenders.

I yield back the balance of my time.

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Ms. WATERS. Will the gentleman yield?

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Ms. WATERS. Thank you so much.

First of all, Mr. Chairman, I would like to thank you for your cooperation on this amendment. I know that there are other words that you would, perhaps, use to explain to the homeowner or to the citizen your point of view; but you did work with me on this, and you thought that this kind of transparency was good.

I do commend you because I know that you have worked directly with some of your constituents. We found out, as we talked with you, that you had helped 18 people with loan modifications and that you were willing to contact the servicers. As you know, there are those who tell us that we shouldn't be doing any of this, but I think you and I agree that we should offer some assistance to the homeowners who contact us.

I would like to thank you for that.

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