[Congressional Record Volume 154, Number 123 (Friday, July 25, 2008)]
[Extensions of Remarks]
[Pages E1559-E1560]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HOUSING AND ECONOMIC RECOVERY ACT OF 2008

                                 ______
                                 

                               speech of

                         HON. JAMES R. LANGEVIN

                            of rhode island

                    in the house of representatives

                        Wednesday, July 23, 2008

  Mr. LANGEVIN. Mr. Speaker, I rise in strong support of the American 
Housing Rescue and Foreclosure Prevention Act of 2008 (H.R. 3221). This 
measure will provide a helping hand for those reeling from the mortgage 
crisis. Just as importantly, it will restore confidence in our largest 
mortgage backers, Fannie Mae and Freddie Mac.
  We have all seen how unscrupulous lending practices and skyrocketing 
interest rates associated with nontraditional mortgages have devastated 
families nationwide. Sadly, these families are often left with few 
options other than to see their homes foreclosed upon. In Rhode Island, 
foreclosures have increased by 20 percent in the last six months, and 
it is our most vulnerable communities that have been disproportionately 
affected.
  Fortunately, today we are considering a package that will stem the 
tide of foreclosures by authorizing $300 billion in loan guarantees to 
establish HOPE for homeowners, a voluntary program administered by the 
Federal Housing Administration (FHA) to help at-risk borrowers 
refinance into viable mortgages. I want to emphasize that this 
assistance is not a bail-out. On the contrary, the program will require 
lenders and mortgage investors to take significant losses in the form 
of a reduced loan principal, and borrowers must agree to share any 
profit from the resale of a refinanced home with the federal 
government. Furthermore, only primary residences will be eligible, not 
investment properties, vacation homes or speculators' purchases.
  In addition, this package will provide $3.92 billion in Community 
Development Block Grants for local governments to purchase abandoned 
and foreclosed properties--a provision that is fully paid for. I am 
glad the President has finally lifted his misguided veto threat

[[Page E1560]]

over this provision and will not stand in the way of local governments 
attempting to reduce the number of vacant properties in their 
communities and invest in affordable housing.
  This legislation will also revitalize the FHA, which was established 
to provide a reliable source of affordable mortgage loans for first-
time homebuyers. The lack of affordable housing has long plagued many 
communities throughout America, and the problem is particularly acute 
in high cost areas like Rhode Island. Through our efforts today, the 
FHA will be able to better assist America's working families by 
offering loans at affordable rates with fair terms. This legislation 
will also allow the FHA to raise loan limits in high cost areas and to 
offer zero- and low-down-payment loan options for borrowers that can 
afford mortgage payments, but lack the resources required for a down 
payment. I also strongly support this bill's creation of a National 
Affordable Housing Trust Fund, which will construct, rehabilitate and 
preserve 1.5 million housing units over the next ten years.
  Above all, this measure will help safeguard the interests of the 
American taxpayer and ensure that our nation's largest mortgage-
backers, Fannie Mae and Freddie Mac, remain strong. I'm pleased that 
H.R. 3221 will create a new independent agency--the Federal Housing 
Finance Agency, FHFA--to regulate Fannie Mae, Freddie Mac and the 
Federal Home Loan Bank System. Fannie Mae and Freddie Mac currently 
back nearly half of our nation's mortgages, and the FHFA will ensure 
both entities remain financially strong. The creation of a strong 
independent regulator for our Government Sponsored Enterprises is long 
overdue. Four years ago I shared Alan Greenspan's concerns that the 
GSE's were involved in risky investments, saying on the House Floor: 
``It appears as though the increased risk that GSE's have been taking 
on is not related to their primary operation of purchasing affordable 
housing loans in the secondary market. Rather, much of their risk comes 
from derivative investments in an effort to maximize profits for 
shareholders. As we learned from Enron, complex derivative schemes may 
boost profits in the short-term, but the long-run risks can be too 
difficult to manage.'' While I regret that it took far too long for 
this problem to be taken seriously, I believe we are taking the proper 
action today.
  This measure will also provide temporary, emergency authority through 
the end of 2009 to the Treasury Department to purchase stock in Fannie 
Mae and Freddie Mac to provide stability to our financial markets, 
prevent disruptions in the availability of mortgage finances, and 
protect taxpayers. While many, including the Congressional Budget 
Office, CBO, predict this authority may never be used, it is necessary 
to ensure a last-resort federal guarantee for our largest mortgage 
backers.
  The American Rescue and Foreclosure Prevention Act also includes 
several key tax incentives designed to spur home buying and put money 
back in the hands of home owners. This legislation creates a $7,500 
credit for first-time homebuyers, designed to serve as an interest-free 
loan to be paid back after fifteen years. H.R. 3221 will also provide 
taxpayers that claim the standard deduction with an additional property 
tax deduction of up to $500 for single filers and $1,000 for joint 
filers.
  Finally, the bill before us will combat unscrupulous lending 
practices and increase transparency by establishing a nationwide loan 
originator licensing and registration system that will set minimum 
standards for licensing and substantially improve oversight of mortgage 
brokers and loan officers. Additionally, it improves disclosure 
requirements to help ensure that borrowers fully understand their 
mortgage loan terms.
  This legislation is an important and common-sense response to the 
housing crisis and will help stabilize families and our economy. I 
thank Chairman Frank for his leadership, and I urge my colleagues to 
support this bill.

                          ____________________