[Congressional Record Volume 143, Number 23 (Thursday, February 27, 1997)]
[Extensions of Remarks]
[Page E353]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   HOUSING COUNSELING ENHANCEMENT ACT

                                 ______
                                 

                      HON. JAMES A. TRAFICANT, JR.

                                of ohio

                    in the house of representatives

                      Thursday, February 27, 1997

  Mr. TRAFICANT. Mr. Speaker, today I am introducing the Housing 
Counseling Enhancement Act to help veterans stave off foreclosure and 
to keep their homes. I urge my colleagues to once again cosponsor and 
support this important legislation.
  The bill, supported by such diverse groups as the Mortgage Bankers 
Association [MBA] and the National Federation of Housing Counselors, 
corrects a flaw in the Housing and Urban Development Act of 1968.
  Under current law, borrowers with conventional loans and borrowers 
with loans backed by the Federal Housing Administration [FHA] receive 
notification informing them that housing counseling is available. The 
notification is sent out by the lender when the account is 45 days 
delinquent and includes a 1-800 number that directs the borrower to the 
nearest housing counseling agency.
  Shamefully, the law exempts from notification requirements veterans 
who receive loans backed by the U.S. Department of Veterans Affairs 
[VA]. My bill, which was approved by the House during the 103d 
Congress, will remove this exemption.
  It is common knowledge that the housing counseling program 
administered by the U.S. Department of Housing and Urban Development 
[HUD] has helped to dramatically stave off foreclosures of FHA-backed 
loans. By working with individuals and families to avoid foreclosure 
and eviction, the program has saved the Federal Government $6 for every 
dollar invested.
  As such, I have worked to expand the reach of housing counselors. In 
1989, I successfully extended the program to include those with 
conventional loans through enactment of the Emergency Homeownership 
Counseling [EHC] Program.
  Although veterans can participate in the housing counseling program, 
they are still excluded from receiving notification. For the past two 
Congresses I have attempted to rectify this situation but to no avail. 
In 1993, my colleagues in the House approved of removing the exclusion, 
but the measure died in the Senate as part of an otherwise contentious 
Housing authorization bill.
  Under my bill, the VA is still free to offer its own counseling 
services. In fact, my measure in no way impacts, burdens, or requires 
any involvement from the VA. Instead, my bill gives borrowers 
additional means to avoid a nightmare.
  It should be pointed out, however, that HUD's notification process is 
more effective than the VA's because the VA does not notify the 
delinquent borrower until he or she is 105 days delinquent. As anybody 
who has faced foreclosure can attest, 90 days is already too late, let 
alone 105. Consequently, although the delinquency rate of HUD-backed 
loans is higher than VA-backed loans, the percentage of loans in 
foreclosure is nearly the same for both types. The notification process 
has also helped to work wonders for conventional loans, where the 
number of loans in foreclosure is less than 1 percent.
  Housing counselors have urged me to help the roughly 3.5 million 
borrowers with VA-backed loans avoid foreclosure. I believe the Housing 
Counseling Enhancement Act is a step in that direction. The MBA has 
expressed, from a lender perspective, that the bill is economically 
sound because it helps to prevent costly foreclosures. In a letter of 
support to my office, the MBA wrote: ``Counseling for veteran borrowers 
experiencing payment difficulties is a valuable tool in preventing 
foreclosures and we, respectfully, urge congressional approval of your 
bill.''
  We would be wise to heed MBA's input. With each foreclosure costing 
the Government an average of $28,000, Congress can ill-afford not to 
adopt the bill.
  Mr. Speaker, at times Congress passes spending programs that appear 
one-way in nature. We spend the money, but never see the benefits. 
Housing counseling, however, is a preventive program with a proven 
track record of helping homeowners avoid nightmarish and costly 
foreclosures.
  Again, I urge my colleagues to sign on as a cosponsor to the Housing 
Counseling Enhancement Act.