[Congressional Record Volume 154, Number 39 (Friday, March 7, 2008)]
[Senate]
[Pages S1743-S1744]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND (for himself, Mr. Isakson, Mr. Alexander, Mrs. Dole, 
        Mr. McConnell, Mr. Allard, Mr. Chambliss, Mr. Cornyn, Mr. 
        Craig, Mr. Hatch, Mr. Inhofe, Mr. Stevens, Ms. Murkowski, and 
        Mr. Coleman):
  S. 2734. A bill to aid families and neighborhoods facing home 
foreclosure and address the subprime mortgage crisis; read the first 
time.
  Mr. BOND. Mr. President, as I described last Friday, too many 
families in Missouri and across the Nation are feeling the pain of this 
Housing crisis, and they need our help now. We have 57,000 people in 
Missouri delinquent on their mortgages, with 20 percent of Missouri 
subprime borrowers behind on their payments. These families, 
unfortunately, similar to many across America in I imagine almost every 
State, can least afford higher housing costs as they are being hit with 
higher heating bills, higher health care costs, and more pain at the 
gas pump.
  That is why today I, in partnership with Senator Isakson, Senator 
Coleman, and several other Republican colleagues, will proudly 
introduce the Security Against Foreclosure and Education, or SAFE, Act 
of 2008. This bill focuses solely on the housing needs of our families 
and neighborhoods.
  A growing economy free of excess litigation and cumbersome regulation 
will help the most people find the most good-paying jobs and the relief 
they need. The HOME Act we introduced last week on our side included 
both housing relief provisions as well as tax relief for American 
families, litigation reform, and capital markets reform.
  However, we do not want Congress to lose sight of the housing crisis 
that too many American people are facing and the help they need right 
now. Therefore, we are introducing this measure today to focus solely 
on the housing help our families and neighborhoods need.
  Last week, I spoke about one person in need, suffering in the current 
subprime mortgage meltdown. That was Willie Clay of Kansas City, MO, a 
Vietnam vet unable to meet rising variable mortgage payments. 
Unfortunately, there are many more like him.
  Today I share with my colleagues the story of Katherine Gwinn of St. 
Louis, MO. Her story appeared in the St. Louis Dispatch last year. She 
is a disabled 53 year old living on Social Security and disability 
payments. Mrs. Gwinn refinanced her home three times to get lower 
payments and help pay off debt. Her subprime loan's initial fixed rate 
expired after 1 year. Since then, her payments have gone up 40 percent, 
now taking a large chunk of her $916 monthly income.
  Ms. Gwinn said the last time she refinanced, her mortgage broker 
fast-talked her into a subprime loan with provisions she did not 
understand. The result is her variable rate payments are now at $566 
per month. As I said earlier, Ms. Gwinn's monthly income of Social 
Security and disability payments is only $916 per month. How many of us 
could pay for food, gas, medicine, and heating bills on the remaining 
$350 per month? That is why I believe so strongly that we need to help 
folks such as Katherine Gwinn across the Nation.
  First, the Republican SAFE Act will help folks such as Katherine 
Gwinn and Willie Clay with $10 billion to State housing finance 
authorities to refinance distressed subprime mortgages. Our proposal 
would authorize the State housing finance agencies to issue $10 billion 
in tax-exempt bonds and use the proceeds to help refinance subprime 
mortgages, refinancing them at or near the original level which they 
could afford.
  Secondly, in order to help families avoid foreclosure and keep them 
in their homes, we propose to expedite the delivery of $180 million 
approved by Congress in December to assure counseling help to families 
in distress. As I announced last week, the first block of these funds 
has gone out, and we will ensure that remaining funds are delivered as 
quickly as possible after we can confirm that counseling is having the 
desired effect. This counseling is important because borrowers need to 
know and lenders need to know the best way to get out of this crisis is 
not to have foreclosures that throw families out of their homes. That 
not only hurts the family, it hurts the lender because they have to 
spend money on foreclosures, and it drives down the price of housing 
that is in their stock. In addition, it hurts communities, because when 
you have a community with significant numbers of foreclosures, you put 
a blanket of debt and hopelessness on communities which cannot remain 
viable.
  Thirdly, we support helping struggling neighborhoods by providing 
$15,000 in tax credits available over 3 years for purchasing a home in 
or approaching foreclosure. This provision, initially proposed by 
Senator Isakson, will help neighbors take down foreclosure signs and 
stop the slide in property values. We also support the so-called net 
operating loss carryback tax provisions to help firms that suffered 
operating losses lower their tax burden, so we enable homebuilders to 
get through this crisis.
  Our proposal includes no new loan disclosure requirements for 
prominent and plain English explanation of key loan conditions. Anybody 
who has purchased a house recently knows you are confronted with a 
stack of papers a half a foot high, with all kinds of legal 
gobbledygook and with provisions, if you looked hard enough, that may 
tell  you what is going to happen to you if you borrow the money. Most 
of it is legalese that we as lawyers--and I admit to having been one--
like to put in to cover every possible contingency. What borrowers need 
to see is in big type: ``Teaser, introductory rates,'' their payments, 
and when it expires. They need to know that if they are agreeing to an 
adjustable rate, what that rate could be and how much the new payment 
penalty will be or if there is going to be a repayment penalty. That 
information needs to be portrayed on the first page so you can see on 
the first page what you are getting into and how much it would cost you 
to get out. They will be reminded that there is no guarantee they will 
be able to refinance their loan before the introductory rate expires.

  These are the very things Katherine Gwinn and Willie Clay and 
thousands of borrowers did not understand when they agreed to their 
loans. We hope this will protect future families who want their share 
of the American dream.

[[Page S1744]]

  I also believe that providing the tax credit will help many first-
time homeowners get into a house and give them the extra cash they need 
to be able to meet their mortgage payments.
  Now, there are two new provisions added to our measure that we did 
not introduce last week. Senator Coleman provided language to give 
returning war veterans more time to avoid home foreclosure. Currently, 
they have a 3-month window from their return to the private sector to 
work out any mortgage difficulties they may have. That may not be 
enough time for a vet newly returned from the war zone and dealing with 
a host of family and financial problems. Our proposal would extend the 
returned war veteran protection against foreclosure to 6 months after 
they return.
  We have also introduced provisions of the Federal Housing Act reform 
bill that passed the Senate 93 to 1 last year. That bipartisan, near 
unanimous reform bill deserves to become law, and it will assist the 
FHA in stepping up to the plate in many areas where that agency can 
provide the kind of help and assistance we initially intended it to 
provide.
  Now, in contrast to the housing proposal introduced on the other 
side, Republicans will avoid making home ownership more expensive, 
especially for low-income families, through harmful bankruptcy changes 
that increase the cost of borrowing or encourage costly litigation.
  If we put in law the fact that bankruptcy judges will be able to cram 
down on lenders' onerous terms that were not included in the initial 
mortgage, they will find that mortgage companies may increase their 
rates by 1.5 to 2 percent. That could mean at least 6 million Americans 
would no longer be able to afford a mortgage to buy the home they need.
  Also, we will oppose plowing billions of dollars into big Government 
programs that will not help our neediest families now. We will also 
oppose adding more dollars to programs that are still flush with funds 
that were given them in December.
  Together, these housing proposals will help families such as those of 
Katherine Gwinn and Willie Clay and neighborhoods across the country 
get through this crisis. I urge my colleagues to support it, and I 
invite all colleagues on both sides of the aisle to join with us to see 
if we cannot pass something that will provide relief now for the many 
families across this Nation who are suffering because of the subprime 
mortgage meltdown and the resulting financial pressures it puts on the 
lending industry and, through them, to the families themselves.
  This is the time. Now is the time for congressional action. I hope 
that with a broad coalition of my colleagues, we will be able to make 
these additions and provide assistance to suffering American families.
                                 ______