[Congressional Record Volume 154, Number 129 (Thursday, July 31, 2008)]
[Extensions of Remarks]
[Page E1630]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HOUSING AND ECONOMIC RECOVERY ACT OF 2008

                                 ______
                                 

                               speech of

                           HON. MAXINE WATERS

                             of california

                    in the house of representatives

                        Wednesday, July 23, 2008

  Ms. WATERS. Mr. Speaker. I rise in strong support of this 
legislation. Simply put, this package is urgently needed to help our 
nation address the current foreclosure crisis and its impacts on the 
world financial markets.
  I will limit my remarks to two parts of the current package that I 
was most active on: modernization of the Federal Housing Administration 
(FHA) and $4 billion in CDBG funding for states and localities to 
purchase, rehabilitate, and resell or rent out abandoned and foreclosed 
homes.
  The modernization of the FHA has long been a priority of mine because 
in recent years FHA had become obsolete in many parts of the country, 
due to its low loan limits ($362,790), outdated rules, and slow 
bureaucracy. I saw too many low-income homebuyers in California with 
little choice but to turn to the subprime mortgage market for 
assistance.
  This Congress, I introduced H.R. 1852, ``the Expanding American 
Homeownership Act of 2007'' to give FHA the tools and resources to 
allow it to assist more low-income homebuyers. H.R. 1852 passed the 
House on September 18, 2007 on a bipartisan vote of 348-72, and again 
on May 8th of this year as part of H.R. 3221, the first go-round on 
this housing rescue package.
  Including FHA modernization in the amendment before the House today 
is essential because FHA is the only national agency with the capacity 
and expertise to assist the nation's homeowners on a large scale.
  Another part of the package that deserves support is funding for 
states, counties, and cities to stabilize neighborhoods devastated by 
foreclosures. According to Realty Trac, banks repossessed over 71,000 
properties in June, an astounding 171 percent more than one year ago. 
This means that 770,000 properties nationwide are now in ``real estate 
owned'' or REO status, an increase of 330,000 since the end of 2007.
  These abandoned and foreclosed properties drag down the value of 
homes still occupied by working families, and contribute to a cascade 
effect whereby plummeting home prices erode the tax base that state and 
local governments have to work with, while straining their police, 
fire, code enforcement, and other resources.
  States and most local governments must balance their budgets each 
year, and as a result, at least 20 states have already made budget cuts 
due largely to revenue losses resulting from the subprime crisis. Even 
so, many hard-pressed states and cities are dedicating their own 
limited resources to purchasing foreclosed properties to stabilize 
neighborhoods.
  But they are overwhelmed by the scale of the problem. For this 
reason, the National Governors Association, the Conference of Mayors, 
the National Association of Counties, and nearly every other local 
government trade association support Federal neighborhood stabilization 
assistance.
  This is why I introduced H.R. 5818, ``the Neighborhood Stabilization 
Act of 2008,'' which passed the House on May 8th of this year. Although 
the amendment before us provides less funding than H.R. 5818--$4 
billion as compared to $15 billion and distributes funds differently, I 
believe that the Senate's language, which we are considering today, is 
basically a sound approach. With time being of the essence, finalizing 
this bill is more important than playing more ping-pong with the 
Senate.
  I am compelled to respond to criticisms raised by the Administration 
about the CDBG funding in H.R. 3221: (1) that it is a bailout for 
lenders and investors, and (2) that it incentivizes foreclosures over 
loan workouts for distressed borrowers. This is simply not so.
  First, the many local officials and community-based nonprofits my 
Subcommittee has heard from are in no mood to give sweetheart deals to 
the financial institutions who own these properties--many of whom they 
are actually suing over their subprime and predatory lending practices 
during the boom years.
  Second, the facts of the current housing market just don't bear out 
the Administration's claims. Lenders spend $50,000 to $60,000 up front 
in a foreclosure, or on average, 25 percent or more of the value of the 
loan. It is unlikely that a lender would refuse to work out a loan with 
a borrower--thereby saving a substantial amount in foreclosure related 
costs--and instead rush to foreclosure on the chance that a community-
based buyer might be willing to purchase the property at 30 to 50 cents 
on the dollar, which is what foreclosed properties are going for upon 
resale these days.
  In closing, I would like to thank Chairman Frank and Speaker Pelosi 
for ensuring that 15 percent of housing counseling funds authorized by 
H.R. 3221 are directed to organizations--like the National Urban 
League--that target counseling services to low-income and minority 
homeowners and neighborhoods.
  African-American and minority neighborhoods were disproportionately 
targeted for subprime loans. It is only appropriate that some of 
portion of the housing counseling funds are targeted to these 
communities, lest minority communities and homeowners once again fall 
through the cracks.
  I urge my colleagues to vote for this legislation.

                          ____________________