[Congressional Record Volume 144, Number 140 (Thursday, October 8, 1998)]
[Extensions of Remarks]
[Page E1963]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1963]]



            THE HOMEOWNERS EMERGENCY MORTGAGE ASSISTANCE ACT

                                 ______
                                 

                         HON. LUIS V. GUTIERREZ

                              of illinois

                    in the house of representatives

                       Thursday, October 8, 1998

  Mr. GUTIERREZ. Mr. Speaker, I rise today to introduce legislation 
that will restore the dream of homeownership to middle- and low-income 
families.
  Mr. Speaker, the sight is all too familiar in urban and rural 
America: boarded-up homes, abandoned lots, blighted communities. These 
sights demonstrate that the dream of homeownership is fleeting for some 
and that these dreams can become nightmares when financial hardship 
occurs. But what often goes unspoken in discussing this issue is the 
fact that some of these abandoned properties were purchased under 
Federal mortgage programs intended to help middle- and low-income 
Americans. This leads us to ask: what improvements can we make to 
Federal mortgage assistance programs so that people can keep their 
homes and live the American dream?
  This is the goal of my legislation, the Homeowners Emergency Mortgage 
Assistance Act. This bill makes needed changes in the way the Federal 
Housing Administration (FHA) administers its mortgage guarantee program 
and will keep the dream of homeownership alive for people facing 
temporary financial difficulties. Under the bill, property owners who 
fail to pay their mortgage for two months, due to no fault of their 
own, would not be subject to immediate foreclosure. Often, homeowners 
cannot honor their mortgage payments because of factors beyond their 
control. For example, the FHA does not require inspections on homes it 
guarantees. After a home is purchased, serious structural dilapidation 
may be uncovered. In such cases, the home may be falling apart and the 
homeowner will not be able to both repair the damage and pay their 
mortgage. The home becomes unlivable and is foreclosed. This further 
blights the neighboring areas and ends the homeowner's dream.
  To resolve this unfortunate situation, my bill would provide 
temporary mortgage assistance to homeowners in need for a period of no 
longer than 36 months. The assistance would have to be paid back to the 
FHA and would only be offered if FHA officials deem that the homeowner 
would be able to honor their mortgage obligations and pay back the 
emergency assistance after this time period.
  Saving people's homes in this manner is a win-win proposition for the 
government, for the homeowners, the lenders and for the adjacent 
communities. As you know, the FHA guarantees 100 percent of mortgage 
loans provided by private lenders to middle- and low-income families 
under the National Housing Act. Yes, 100 percent. When a home is 
foreclosed, the FHA has to pay the lender the entire cost of the 
mortgage. As you can imagine, this is tremendously costly. It can also 
be avoided in many cases.
  In such cases, temporary assistance can make all the difference for 
homeowners, allowing homeowners to pay for repairs and honor their 
mortgages. The FHA saves money because the temporary assistance they 
provide is far less costly than paying the full cost of the mortgage. 
In addition, the temporary assistance must be paid back thus recouping 
additional taxpayers' dollars. The lenders are equally satisfied 
because they are receiving their monthly assessments. And the community 
is preserved from blight that would otherwise reduce property values 
throughout the area. The Homeowners Emergency Mortgage Assistance Act 
is a solution that restores the dream of homeownership for everyone 
concerned.
  The program has also been ``battle-tested.'' My legislation is based 
on a very successful program in Pennsylvania. More than 24,000 
Pennsylvania families faced with possible foreclosure have received 
help from the state's Homeowners Emergency Mortgage Assistance Program 
(HEMAP). Pennsylvania's Republican Governor Tom Ridge and Democratic 
leaders throughout the state have hailed the program as a cost-
efficient means to prevent homelessness. In Pennsylvania, 90 percent of 
assistance payments have been paid back and only eight percent of HEMAP 
loans have resulted in foreclosure. This record of success should be 
duplicated at the Federal level.
  Saving homes, money and neighborhoods is what government programs 
should work to achieve. The Homeowners Emergency Mortgage Assistance 
Act will accomplish these vital goals. I urge my colleagues to co-
sponsor this legislation and work with me to maintain the dream of 
homeownership for middle- and low-income Americans.

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