[Congressional Record Volume 146, Number 150 (Thursday, December 7, 2000)]
[Extensions of Remarks]
[Pages E2149-E2150]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      AMERICAN HOMEOWNERSHIP AND ECONOMIC OPPORTUNITY ACT OF 2000

                                 ______
                                 

                               speech of

                            HON. KEN BENTSEN

                                of texas

                    in the house of representatives

                       Tuesday, December 5, 2000

  Mr. BENTSEN. Mr. Speaker, I rise in strong support of H.R. 6540, 
important legislation that removes barriers to housing affordability 
and encourages homeownership for low and moderate-income Americans.
  H.R. 5640 incorporates much of H.R. 1776, a comprehensive housing 
bill that I cosponsored and which House passed overwhelmingly in April 
2000 with my support. The most far-reaching provision of this bill 
would extend down payment assistance to low and moderate income 
families, under the Section 8 Program. Specifically, H.R. 5640 would 
vest local housing authorities with the power to provide a single grant 
for down payment assistance in the purchase of a home, moving families 
who receive Section 8 housing rental assistance into the realm of 
``homeowners''. I support H.R. 5640 because it not only broadens the 
availability of affordable housing choice for many deserving American 
families, it also removes the disincentives to the production and 
availability of affordable housing programs.
  H.R. 5640 provides for the establishment of a FHA down-payment 
formula by which lenders and borrowers calculate the amount of down-
payment required for an FHA loan, dramatically improving the operation 
of the Federal Housing Administration's single-family program. This 
technical correction improves FHA administrative efficiency and 
provides the home buying industry and their customers a readily 
comprehensible tool for calculating the down-payment for an FHA loan.
  As a member of the House Banking Committee, I strongly support 
provisions in H.R. 5640 that will make technical corrections and 
clarifications to the Homeowners Protection Act. This law ensures that 
homeowners have the right to cancel their Private Mortgage Insurance 
(PMI) on their home mortgages once the homeowner attains a certain 
level of equity in the home (usually 22%, but in some cases 20%). This 
measure clarifies that PMI cancellation rights for adjustable rate 
mortgages (ARMs) are based on the amortization schedule that is 
currently in effect. This provision ensures that consumers get full 
benefit of any adjustments that have been made based upon recent 
calculations. Moreover, under this provision, consumers with a ``good 
payment history'' will be given the explicit right to cancel their PMI, 
removing any existing ambiguity about this term. I strongly believe 
that these corrective provisions improve consumer protections and 
substantially improve the Homeowners Protection Act.
  With respect to consumer protections, H.R. 5640 would provide elderly 
homeowners with additional measures to refinance their reverse 
mortgages while establishing protections to shield them from fraud and 
abuse. I am pleased that senior citizens in Texas' 25th District, who 
have only recently been given the ``green light'' from HUD to take out 
reverse mortgages, would be allowed to refinance these federally-
insured home equity conversion mortgages under this provision of H.R. 
5640. This provision would enable seniors to obtain loans up to the 
higher FHA loan limits, enacted in 1998. I am also pleased that this 
measure orders HUD to prohibit broker fees, limit origination fees for 
refinanced reverse mortgages and, in cases where loan proceeds are used 
for the costs of long-term medical care insurance, instructs HUD to 
waive the up-front mortgage insurance premium.
  As the Ranking Democrat on the House Budget Committee's Housing and 
Infrastructure Task Force, I am especially pleased to support this 
legislation because it includes a section dealing with prevention of 
fraud in the Department of Housing and Urban Development's (HUD) 203(k) 
home acquisition and rehabilitation program. I have been working on 
this specific issue for several years, and with the assistance of my 
colleague Rick Lazio, the U.S. General Accounting Office (GAO) agreed 
to review and investigate HUD's Title I program in 1998. The Title I 
program, the oldest government housing program, provides low-income 
homeowners with government backed loans of up to $25,000 to finance 
personal home repairs, with the money distributed directly to the 
contractor. I know of too many cases where unscrupulous contractors 
have targeted low-income homeowners, convinced them to take out large 
home repair loans, and then failed to perform the contracted work.
  As a Congressman from the Houston area, this issue has particular 
resonance. In recent years, several investigative news reports in 
Houston have uncovered cases where unscrupulous contractors used this 
government's guaranteed FHA loan program to defraud homeowners in and 
around my district. Many of these homeowners are elderly and live on 
fixed incomes and had been the victim of shady contractors who provided 
shoddy or incomplete work. Many of these elderly homeowners were forced 
into default, and the taxpayers were left holding the bill. I am 
pleased that this legislation includes important provisions to 
strengthen the anti-fraud provision in the guaranteed FHA program.

[[Page E2150]]

  Finally, with all that is good in H.R. 5640, I am, however, 
disappointed that it abandons a key provision of H.R. 1776 which would 
make available a 1% down FHA mortgage loan for qualified teachers, 
police, fire fighters and municipal employers when purchasing a home in 
the community they serve. Congressional Budget Office estimates show 
that, over a five-year period, this provision would provide 125,000 new 
loans, helping rebuild and strengthen neighborhoods.
  I urge my colleagues to open and expand the opportunity of 
homeownership by supporting this important bi-partisan legislation.

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