[Congressional Record Volume 155, Number 116 (Wednesday, July 29, 2009)]
[House]
[Pages H8971-H8973]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     NEIGHBORHOOD PRESERVATION ACT

  Mr. MOORE of Kansas. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 2529) to amend the Federal Deposit Insurance Act to 
authorize depository institutions and depository institution holding 
companies to lease foreclosed property held by such institutions and 
companies for up to 5 years, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2529

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Neighborhood Preservation 
     Act''.

     SEC. 2. FINDINGS.

       The Congress finds as follows:
       (1) Depository institutions and affiliates of depository 
     institutions currently may control and lease foreclosed 
     property for a limited period of time often subject to safety

[[Page H8972]]

     and soundness considerations, under various Federal laws and 
     the law of some States.
       (2) Authorizing such institutions and affiliates to enter 
     into a long-term lease with the occupant of the property or 
     any other person would reduce the number of residential 
     properties entering into the housing inventory, which in turn 
     would help to stabilize home values and restore confidence in 
     the housing markets.
       (3) Allowing depository institutions and affiliates of such 
     institutions to lease foreclosed property will allow the 
     institution or affiliate to dispose of such property into a 
     presumably more stable market at the end of the lease term 
     which would reduce the loss the institution or affiliate may 
     otherwise be required to recognize upon disposition of the 
     property.
       (4) Providing a means for foreclosed property to remain 
     occupied during the housing downturn will preserve the 
     property itself as well as the aesthetic and economic values 
     of neighboring homes and even whole neighborhoods.
       (5) Allowing depository institutions to lease foreclosed 
     property gives families the opportunity to remain in the 
     home, causing less disruption to families, until they have 
     the means to become a homeowner again.

     SEC. 3. BANK LEASING OF FORECLOSED PROPERTIES.

       (a) In General.--Section 18 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828) is amended by adding at the 
     end the following new subsection:
       ``(y) Leasing of Foreclosed Property.--
       ``(1) Leasing authorized.--Notwithstanding any provision of 
     Federal or State law restricting the time during which a 
     depository institution, or any affiliate of a depository 
     institution, may hold or lease property, or any provision of 
     Federal or State law prohibiting a depository institution, or 
     any affiliate of a depository institution, from leasing 
     property and subject to this subsection and regulations 
     prescribed under this subsection, any depository institution, 
     and any affiliate of a depository institution, may lease to 
     any individual, including a lease with an option to purchase, 
     for not to exceed 5 years an interest in residential property 
     which--
       ``(A) was or is security for an extension of credit by such 
     depository institution or affiliate; and
       ``(B) came under the ownership or control of the depository 
     institution or affiliate through foreclosure, or a deed in 
     lieu of foreclosure, on the extension of credit.
       ``(2) Safety and soundness regulations.--The Federal 
     banking agencies shall jointly prescribe regulations which--
       ``(A) establish criteria and minimum requirements for the 
     leasing activity of any depository institution or affiliate 
     of a depository institution, including minimum capital 
     requirements, that the agency determines to be appropriate 
     for the preservation of the safety and soundness of the 
     institution or affiliate;
       ``(B) establish requirements or exceptions that the agency 
     determines are appropriate under this subsection for any such 
     institution or affiliate for any other purpose; and
       ``(C) provide for appropriate actions under section 38 with 
     respect to any such lease if necessary to protect the capital 
     or safety and soundness of the institution or affiliate or 
     any other necessary enforcement action.
       ``(3) Length of lease.--If any provision of any Federal or 
     State law, including the Bank Holding Company Act of 1956, 
     governing the permissible activities of depository 
     institutions or affiliates of depository institutions permits 
     a depository institution or any such affiliate to hold 
     property as described in paragraph (1) for a period longer 
     than 5 years, any lease under paragraph (1) may be extended 
     to the extent permitted by such provision of law.
       ``(4) Sunset.--This section shall apply only with respect 
     to leases entered into during the 2-year period beginning on 
     the date of the enactment of the Neighborhood Preservation 
     Act.''.
       (b) Intent of the Congress.--It is the intent of the 
     Congress that--
       (1) no permanent change in policy on leasing foreclosed 
     property is being established with respect to depository 
     institutions and depository institution holding companies; 
     and
       (2) subsection (y) of section 18 of the Federal Deposit 
     Insurance Act should not apply to leases entered into after 
     the sunset date contained in such subsection.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Kansas (Mr. Moore) and the gentleman from California (Mr. Gary G. 
Miller) each will control 20 minutes.
  The Chair recognizes the gentleman from Kansas.


                             General Leave

  Mr. MOORE of Kansas. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days within which to revise and extend their 
remarks on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Kansas?
  There was no objection.
  Mr. MOORE of Kansas. Mr. Speaker, I yield such time as he may consume 
to the gentleman from Indiana (Mr. Donnelly), a chief sponsor of this 
legislation.
  Mr. DONNELLY of Indiana. Mr. Speaker, today I rise in strong support 
of H.R. 2529, the Neighborhood Preservation Act, which I joined my 
colleague from California, Mr. Gary G. Miller, in introducing.
  This bill would amend The Federal Deposit Insurance Act to allow 
depository institutions like banks to temporarily lease a foreclosed 
property for up to 5 years. This bill is a fiscally responsible way to 
help mitigate the damage of the housing crisis and does not cost the 
government any money. The President has recently spoken in support of 
this idea. We hope that banks will utilize this to mitigate damage to 
hard-hit communities and prioritize working with the foreclosed family 
first.
  My home State of Indiana ranks 13th in the country for number of 
foreclosures. Our district has felt the pain of the economic downturn, 
as many have lost jobs and struggled to make ends meet. Like many 
Americans, we have found ourselves unable to pay our mortgages and 
faced with foreclosure, and that is what has happened to many families 
in our district.

                              {time}  1100

  When a bank is forced to foreclose on a home, many people suffer. The 
family suffers as they are forced to find a new place to live and new 
schools for their children. One foreclosure can depress an entire 
neighborhood by decreasing the values of surrounding properties, and 
the depository institution that holds the mortgage no longer receives 
payments on the home. H.R. 2529 would help to minimize the impact of 
foreclosure by allowing depository institutions to rent a foreclosed 
property for up to 5 years to the previous owner or to another owner. 
Allowing depository institutions to lease the foreclosed property gives 
families a chance to stay in their home and to make payments as a 
renter until they have the means to become an owner again. It does so 
without adding any cost to our deficit. Not only does this help provide 
some relief to the former homeowner, it helps to preserve the economic 
values of surrounding homes in the neighborhood, and it provides 
stability in the housing market. The number of foreclosed homes on the 
market have contributed to an oversupply of unoccupied homes. Having a 
high number of unoccupied bank-owned homes negatively impacts whole 
communities and can even drive up crime, as these vacant homes can 
become havens for squatters. There are 19 million vacant homes across 
the United States. That's up from 15.7 million only 4 years ago. These 
homes present a number of safety concerns. By allowing a family to 
reside as a renter, they're able to care for the property and prevent 
further adverse consequences. This bill is a temporary measure that can 
serve as a useful tool to keep excess housing stock off an already 
saturated market.
  I want to thank the gentleman from California for his work on H.R. 
2529, and I'd like to thank Chairman Frank and Ranking Member Bachus 
for their support on this important piece of legislation. I urge my 
colleagues to support H.R. 2529.
  Mr. GARY G. MILLER of California. I yield myself as much time as I 
may consume.
  Mr. Speaker, I rise in support of the Neighborhood Preservation Act, 
a bill that I introduced with my colleague from Indiana, Joe Donnelly, 
who I want to thank for his support on this. This bipartisan 
legislation is supported by Chairman Frank and Ranking Member Bachus of 
the House Financial Services Committee, who are both cosponsors of the 
bill.
  This bill amends the Federal Deposit Insurance Act to authorize 
depository institutions and their holding companies to lease foreclosed 
properties held by institutions for up to 5 years while ensuring the 
safety and soundness of such activity. H.R. 2529 would provide a tool 
to address the current foreclosure crisis. Today the American economy 
is suffering from an overburdened inventory of available houses for 
sale, roughly estimated at a 10-month supply. In some areas of the 
country, distressed sales have reached almost 90 percent of the houses 
being sold which are continually driving down home and neighborhood 
values. In my district, distressed sales represent approximately 86 
percent of homes on the market in San Bernardino County, 65 percent in 
Los

[[Page H8973]]

Angeles County, and almost 50 percent in Orange County. In fact, 
foreclosures have caused prices to decline in California alone by 30 
percent in recent months, and they continue to be a problem.
  To address the inventory surplus and help stabilize the housing 
market, the Neighborhood Preservation Act would allow banks to 
temporarily--and I emphasize temporarily--lease foreclosed properties. 
Under the bill, the prior homeowner would have the opportunity to lease 
a property and could be given the option to buy back the home. By 
allowing a family to lease a property rather than abandon it, families 
would be given a chance to remain in their homes until they have the 
means to own again. This legislation would also enable the lender to 
sell the property within 5 years into a more stable market; thereby, 
potentially recovering all or part of the losses that could otherwise 
have occurred in an immediate sale in a saturated market. The 
Neighborhood Preservation Act would not only reduce the number of 
houses being sold, but it would help preserve the physical condition of 
foreclosed properties, which would ultimately help stabilize the 
aesthetics and economic value of neighborhoods and communities. This 
would minimize the negative impact on surrounding homes and 
neighborhoods that have been impacted by the unrelenting foreclosure 
crisis.
  To ensure bank solvency, this bill would require the Federal bank 
agencies to establish criteria and minimum requirements for the leasing 
activities of any depository institution, including minimum capital 
requirements that the agency determines to be appropriate for the 
preservation of the safety and soundness of the institution. The bill 
explicitly states that ``it is the intent of Congress that no permanent 
change in policy on leasing foreclosed property is being established 
with respect to depository institutions'' and their ``holding 
companies.'' The purpose of this bill is to mitigate the impact of the 
oversupply of homes on the marketplace and allow individuals the chance 
to stay in their homes during these exigent circumstances.
  Mr. Speaker, at no cost to the taxpayer, this bill will help preserve 
properties and communities, provide more confidence in our housing 
markets, and assist in stabilizing the economy.
  At this point, I reserve the balance of my time.
  Mr. MOORE of Kansas. Mr. Speaker, I have no further requests for 
time, so I will let the other side close.
  Mr. GARY G. MILLER of California. In recent years, many of you recall 
that there have been concerns about allowing banks to get involved in 
the real estate marketplace, specifically being involved in housing 
sales and housing transactions other than for pure lending purposes.
  So before I introduced this bill, I went to all the associations to 
make sure the understanding was that this was clearly a temporary bill. 
This bill has been endorsed by the National Association of REALTORS, 
which mainly had a huge concern with banks being involved with real 
estate, the National Association of Homebuilders and the National 
Association of Mortgage Brokers. This bill was discharged from 
committee without a hearing because the ranking member and the chairman 
both believed this bill could really have a major impact. That's why 
this bill is on the floor. I ask for an ``aye'' vote.
  I yield back the balance of my time.
  Mr. MOORE of Kansas. Mr. Speaker, I have no further requests for 
time, I urge my colleagues to support this bill, and I yield 1 minute 
to the gentleman from Indiana (Mr. Donnelly) to close.
  Mr. DONNELLY of Indiana. Mr. Speaker, I urge my colleagues to support 
H.R. 2529. This bill is a very, very positive step for the homeowners, 
for our neighborhoods, as well as a way to help solve the problem of 
foreclosed homes in America. So I urge Members' support.
  Mr. AL GREEN of Texas. Mr. Speaker, I am pleased to submit my support 
of H.R. 2529, the Neighborhood Preservation Act. This Act will allow 
depository institutions and their affiliate entities to lease 
foreclosed properties for up to five years- it also has a provision 
which would allow for people to sign leases with the intent to 
purchase.
  The Neighborhood Preservation Act is a commendable approach to 
utilizing the growing inventory of foreclosed properties and putting 
American families back into homes. Allowing foreclosed homes to be 
leased is a win-win situation. This allows people who may not be 
financially positioned to buy a house an opportunity to live in and 
potentially purchase a home while also allowing the bank to get some of 
the money back from the foreclosed property.
  Additionally, by allowing depository institutions to lease foreclosed 
properties, we will put people in homes and begin to reduce the housing 
inventory overhang that is currently causing downward pressure on home 
values. This will help stabilize the housing market and will help 
facilitate the recovery of the greater economy.
  Communities throughout the nation will benefit from this legislation, 
and it could not have come at a more opportune time.
  Mr. MOORE of Kansas. I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Kansas (Mr. Moore) that the House suspend the rules and 
pass the bill, H.R. 2529, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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