[Congressional Record Volume 156, Number 114 (Friday, July 30, 2010)]
[Extensions of Remarks]
[Pages E1527-E1528]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        INTRODUCTION OF THE MAKING HOME AFFORDABLE ACTS OF 2010

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                         HON. JOHN P. SARBANES

                              of maryland

                    in the house of representatives

                         Friday, July 30, 2010

  Mr. SARBANES. Madam Speaker, I rise to introduce the Making Home 
Affordable Improvements Act of 2010. For the last eighteen months, the 
Obama Administration has tried very hard to make mortgage modifications 
available to struggling homeowners but the program has largely failed 
to have the impact we had hoped.
  Average homeowners around the country are paying the price for an 
inflated housing market and a bursting real estate bubble--this is 
being felt acutely throughout Central Maryland. For every borrower who 
defaults, there are many others on the brink of default who are looking 
for a way forward.
  And this isn't a problem that will go away quickly--an estimated 10 
to 15 million Americans own homes that are worth less than they owe on 
their mortgages. These are homeowners with a strong financial incentive 
to default on their mortgages, irrespective of their ability to pay.
  In a market in which the values of homes have fallen out of step with 
mortgage debt, I strongly believe that the best solution for homeowners 
is a structured bankruptcy process, including a judicial mortgage 
modification or ``cramdown.'' This is the process by which a bankruptcy 
judge reduces the value of a mortgage attached to a home, thereby 
reducing the monthly payment owed by the homeowner and allowing 
families to stay in their homes.
  This would be only available to homeowners who elect to file 
bankruptcy, a lengthy and costly process with long-term consequences 
for individuals and their families--an avenue of last resort for 
struggling homeowners, not a new means for speculators to ``game the 
system.'' The House of Representatives passed legislation to provide 
bankruptcy judges with this authority, only to watch it die in the 
Senate. The political reality today is such that judicial mortgage 
modification may never become an available option for struggling 
homeowners, leading policy makers to search for an alternative.
  Absent judicial modification, I believe that voluntary mortgage 
modification holds the promise of a better way forward for homeowners, 
but, as it stands today, it has failed to offer real relief to the 
millions of homeowners who are in desperate need of assistance. This 
can be attributed to a widespread unwillingness by banks to do right by 
their borrowers--the same borrowers who are acting against their 
financial self-interest by continuing to pay their mortgages each 
month.
  The effort is also hampered, in part, by a bureaucratic and unwieldy 
modification process--one that is often overwhelming and unmanageable 
for the average homeowner. But working within the voluntary mortgage 
modification structure created by the White House as part of the Making 
Home Affordable Initiative, there are thousands of experts across the

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country who are counseling homeowners on how to navigate this process.
  These expert counselors are too often the last line of defense 
between a struggling homeowner and a lender seeking to foreclose and 
cast families out of their homes. Sadly, they do not have the resources 
they need to help the staggering number homeowners in crisis--a number 
projected to rise significantly in the coming months.
  That is why I am introducing the Making Home Affordable Improvements 
Act--legislation that will direct funding designated for the big banks, 
as part of the Home Affordable Modification Program (HAMP), to the 
National Foreclosure Mitigation Counseling Program.
  Federal foreclosure mitigation funding has enabled housing and 
mortgage experts to work with homeowners to avoid foreclosure, offering 
counsel on budgeting and planning as well as offering assistance in 
negotiating mortgage modifications with servicers. With this new 
funding, comes more stringent demands on banks, financial servicers and 
counselors.
  The Making Home Affordable Improvements Act seeks to achieve two 
goals. First, for counselors working with borrowers struggling to stay 
in their homes, this legislation provides a small, lump-sum payment for 
each temporary trial modification arranged. But the ultimate goal must 
be either a permanent modification of the terms of their mortgage or an 
orderly, foreclosure-free exit from their homes. Unfortunately, there 
has been a substantial disconnect between the number of temporary 
agreements made between borrowers and servicers and the number of 
homeowners that ultimately receive permanent relief. That is why this 
legislation places a priority on permanent modification by providing 
counselors with a greater incentive to see these borrowers through to 
the end.
  Because we have struggled to get access to meaningful data on the 
mortgage modifications performed by financial servicers, this 
legislation also requires regular, public disclosures by participating 
servicers.
  Madam Speaker, this is not a perfect solution and I hope we will 
continue to look for ways to restore the authority for judges to modify 
mortgages through the bankruptcy process. But, in the meantime, lenders 
and servicers can and must do more to help struggling homeowners stay 
in their homes. By providing additional resources for mortgage 
modification counselors, we can provide expert assistance to struggling 
homeowners who are seeking an equitable agreement with their lender.

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