[Congressional Record Volume 155, Number 39 (Thursday, March 5, 2009)]
[Extensions of Remarks]
[Pages E577-E578]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009

                                 ______
                                 

                               speech of

                           HON. RUSH D. HOLT

                             of new jersey

                    in the house of representatives

                      Thursday, February 26, 2009

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bll (H.R. 1106) to 
     prevent mortgage foreclosures and enhance mortgage credit 
     availability:

  Mr. HOLT. Mr. Chair, I rise today in support of the Helping Families 
Save Their Homes Act of 2009 (H.R. 1106), and to commend Chairman 
Frank, Chairman Conyers, and the Financial Services and Judiciary 
Committees for their leadership and hard work on this measure. I urge 
my colleagues to support it.
  No doubt, the experience of my colleagues is the same at when the 
economy spiraled out of control last year, my constituents did not call 
me and write me and come to my Town Hall meetings saying ``please give 
my hard-earned taxpayer dollars to Wall Street. Wall Street is really 
hurting, and I want to do my part to help.'' No, they came to me saying 
``I am in trouble. I played by the rules. I did everything right, but 
my life is falling apart, and my home is about to be taken away. Please 
help me.'' We responded a few weeks ago by enacting the American 
Recovery and Reinvestment Act to help stimulate the economy and get 
people back to work while providing for the essential services people 
need to get by. Today, we are taking another very important step by 
responding to the foreclosure crisis that is at the root of the 
recession.
  The foreclosure crisis is a vicious cycle. Due to plummeting home 
values in recent years, an estimated 14 million homeowners owe more on 
their homes than their homes are worth; their mortgages are ``under 
water''. For a variety of reasons, including predatory lending abuses, 
exploding adjustable rate mortgage payments, and increasing job losses, 
homeowners all over the country have tried to refinance their mortgages 
into lower rates just to make ends meet. But the decreased values of 
their homes made that impossible. Unable to afford their current 
mortgage payments, unable to refinance them, and unable to sell the 
homes due to the depressed housing market, many face foreclosure. 
According to the trade research organization RealtyTrac, lenders made 
foreclosure filings on 2.3 million properties last year alone. Each 
foreclosed home reduces nearby property values by as much as 9 percent, 
sending those surrounding homes down the path towards being under 
water. And the cycle continues. Congress must act, must act now, and 
must act with force and determination.
  The Helping Families Save Their Homes Act attacks the foreclosure 
crisis aggressively, and approaches the problem from many angles at 
once, but is measured in its application. The bill would help millions 
of homeowners stay in their homes, by including incentives to encourage 
lenders to negotiate affordable mortgages for homeowners whose 
mortgages are under water, who are at risk of foreclosure, and who are 
facing bankruptcy. For example, it would modify the Hope for Homeowners 
program by reducing the fees that discouraged lenders from voluntarily 
participating in that program last year, and by providing for a $1,000 
incentive payment to servicers for each successful refinancing of an 
existing loan.
  The bill also provides special protections for veterans, by allowing 
the Department of Veterans Affairs, the Federal Housing Administration 
(FHA), and U.S. Department of Agriculture to guarantee and/or insure 
mortgage loans that have been administratively or judicially modified. 
Therefore the bill would provide additional financial incentives for 
lenders to voluntarily modify mortgage loans instead of foreclosing. 
The bill also would expand the FHA's mortgage loan modification 
abilities by allowing a reduction of interest payments of up to 30 
percent of the outstanding loan balance.
  Most importantly, the bill would pay for adjustments to existing 
programs by tapping into $2.316 billion in already-authorized funding 
under the Troubled Assets Relief Program enacted last year. Therefore, 
to be clear--this is not a ``new bailout.'' This bill gives back to 
taxpayers more than 2 billion taxpayer dollars that previously had been 
allocated to Wall Street by previously-enacted legislation.
  In addition to incentivizing lenders to modify mortgages to keep 
families in their homes, the bill would give homeowners an important 
new tool to fend for themselves: judicial modification of primary home 
loans. By allowing bankruptcy judges to modify the terms of the home 
mortgages at the core of the economic crisis--the mortgages already 
issued prior to enactment of this bill under terms, conditions and 
circumstances that forced so many of them into foreclosure or the brink 
of failure--we help our constituents remain in their homes under 
revised payment plans they can afford. This important protection also 
does not cost taxpayers anything, but it could reduce foreclosures by 
20 percent.
  The mere fact that homeowners have judicial modification of primary 
home mortgages available as an option, which is already available for 
vacation home loans and other consumer loans, will further encourage 
lenders to modify mortgages before borrowers file for bankruptcy. In 
addition, as it would be further fine-tuned by the Conyers amendment, 
the bill would apply a ``good faith'' test to deny bankruptcy 
modification relief to individuals who can afford to repay their 
mortgages without it, and extend the negotiation period requiring the 
debtor to certify that he or she contacted the lender and sought to 
reach agreement on a qualified loan modification. As perfected, the 
amendment would also allow a court to consider, in lieu of reducing 
principal in a modification, reducing the interest rate to lower the 
borrower's monthly payment; enhance the ``good faith'' test restricting 
the use of judicial modification to reduce principal by requiring 
courts to determine whether a lender offered to modify the loan and 
whether the debtor could afford the offered modification; and increase 
the proportion of appreciation on a home that a lender could recoup in 
a sale

[[Page E578]]

within five years after the modification. The bill already includes a 
provision protecting mortgage servicers from lawsuits by investors who 
may be unhappy with the mortgage modifications.
  Some have expressed the concern that this bankruptcy option will 
increase the cost of borrowing for other homeowners. Compared to the 
alternative of foreclosure, however, judicial modification should 
maximize, rather than decrease, the value of troubled mortgages for the 
lender. According to economist Mark Zandi, ``[g]iven that the total 
cost of foreclosure to lenders is much greater than that associated 
with a Chapter 13 bankruptcy, there is no reason to believe that the 
cost of mortgage credit across all mortgage loan products should 
rise.'' In addition, because the bankruptcy modification right only 
applies to mortgages issued before enactment of the bill, home 
mortgages issued in the future will be viewed as more stable, reliable 
and predictable than loans that can be modified in bankruptcy, and 
capital should again in the future readily flow to the home mortgage 
industry as it did in the past.
  The bill also recognizes that unchecked predatory lending activity 
was one of the root causes of the crisis we face today and attacks that 
problem directly in several ways. For example, it requires the 
Department of Housing and Urban Development (HUD) to approve all 
parties participating in the FHA single family mortgage origination 
process, allows HUD to impose a civil money penalty against loan 
originators which are not HUD-approved but participate in FHA mortgage 
originations, and establishes other rigorous conditions on eligibility 
for would-be participants in the program.
  Finally, it makes permanent an increase, from $100,000 to $250,000, 
in the amount of bank or credit union deposits insured by Federal banks 
and credit union regulators, and increases these regulators' authority 
to obtain additional liquidity from the US Treasury. It is an 
aggressive and comprehensive, but thoughtful and measured bill. It puts 
taxpayers first, and most of it costs nothing or is already paid for by 
taking taxpayer funds that had been allocated to Wall Street and 
returning them to Main Street. I urge my colleagues to support it.

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