[Congressional Record Volume 153, Number 127 (Friday, August 3, 2007)]
[Senate]
[Page S10935]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 2008. A bill to reform the single family housing loan guarantee 
program under the Housing Act of 1949; to the Committee on Banking, 
Housing, and Urban Affairs.
  Ms. LANDRIEU. Mr. President, I rise today to introduce the Home 
Ownership Made Easier Act, or the HOME Act. This bill will revitalize 
our Nation's rural communities by making it easier to become a 
homeowner and to provide opportunities to refinance high interest and 
subprime loans.
  Our country has provided many excellent opportunities over the years 
to individuals living in rural areas to become a homeowner. One of 
these programs is what is commonly referred to as the 502 program 
administered by the U.S. Department of Agriculture. This program 
administers guaranteed loans to low-income families that are backed by 
the U.S. Government. Families must be able to show that they are 
without adequate housing and not exceed certain income limits. 
Currently, these loans last 30 years and do not require a down payment, 
however the applicant must be able to afford mortgage payments, 
including taxes, and insurance.
  I applaud the success of the 502 program. In Louisiana alone, the 
program has already administered 1,212 loans for 2007 and nationwide, 
the program has administered 27,643 loans. While the program does cost 
the taxpayer approximately $42 million a year, it administers over $3 
billion in loans a year. Let me repeat that again, for $42 million a 
year, our Government is able to provide $3 billion in loans a year to 
low-income families to become homeowners. The risk extremely low. In 
2006, the 502 program has a foreclosure rate of 1.36 percent. Again, I 
applaud the success of our Government to provide this much-needed help 
to rural Americans.
  Some might ask why should the Federal Government help low-income 
families become homeowners? The answer is simple. Homeownership 
provides financial advantages to owners and to their communities. 
Individuals who own homes have an investment, of those that own homes, 
on average, one-half of the equity in their homes is one-half of their 
net worth. Homeowners enjoy tax benefits and they also enjoy financial 
stability if they are locked into a permanent interest rate. 
Communities also benefit, those that have a high percentage of 
homeownership see increased involvement with the community and with the 
local schools.
  Also, maybe most importantly, homeownership by low-income households 
is linked to a child's educational advancement and future success.
  My HOME Act will build upon the success of the 502 program and update 
the program to reflect current conditions. In some instances, this law 
hasn't been updated in nearly 30 years.
  The HOME Act will do five things. First, it will increase the 
qualifying income limits for families and set out a three-tiered level 
of income standard instead of the current eight tiered standard. The 
first tier will be for families that have one to four individuals, the 
second tier is established for families of 5 to 8 persons and the third 
tier is for families larger than eight.
  The second change will affect the qualifying population limit. 
Currently, the population limit is tied to communities of 10,000 or 
less in an areas contained within a standard metropolitan statistical 
area, MSA, and communities less than 20,000 if they are not contained 
within a MSA. My HOME Act will expand the qualifying population limit 
to encompass rural communities of 40,000 or less.
  HOME Act legislation will maintain the guaranteed fee that an 
applicant is required to pay at 2 percent, instead of raising the fee 
to 3 percent. This is to keep costs low for the borrower. It will also 
reduce the redtape involved by allowing an applicant that qualifies for 
a 502 loan to receive that loan regardless of whether or not the 
applicant can qualify for another Federal Government housing loan.
  Finally, my bill will provide opportunities for individuals inside 
and outside the 502 program to refinance their loans. These 
opportunities include refinancing to pay for a first or second purchase 
mortgage, for repairs to structural deficiencies, to pay for closing 
costs, and allow a borrower to consolidate debts up to the greater of 
$10,000 or 10 percent.
  The 502 program is an excellent program that has helped many 
individuals and families afford to purchase a clean, affordable home 
that increases their quality of life. I want to expand this program and 
allow more opportunities for low-income rural Americans to become 
homeowners. This is a good bill and I look forward to working with my 
colleagues to make this bill a reality.
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