[Congressional Record Volume 156, Number 168 (Friday, December 17, 2010)]
[House]
[Pages H8623-H8629]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1110
              AIDING THOSE FACING FORECLOSURE ACT OF 2010

  Mr. CAPUANO. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 5510) to amend the Emergency Economic Stabilization Act of 
2008 to allow amounts under the Troubled Assets Relief Program to be 
used to provide legal assistance to homeowners to avoid foreclosure, as 
amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5510

       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 ``Aiding Those Facing 
     Foreclosure Act of 2010''.

     SEC. 2. FORECLOSURE AVOIDANCE ASSISTANCE.

       Section 109 of the Emergency Economic Stabilization Act of 
     2008 (12 U.S.C. 5219) is amended by adding at the end the 
     following new subsection:
       ``(d) Legal Assistance.--
       ``(1) Use of funds.--The Secretary shall make amounts that 
     were obligated under this title, through the financial 
     instruments for the Housing Finance Agency Innovation Fund 
     for the Hardest-Hit Housing Markets program of the Secretary 
     (in this subsection referred to as the `Hardest-Hit Fund'), 
     available to eligible entities, housing finance agencies, or 
     affiliates of such entities or agencies participating in the 
     Hardest-Hit Fund, upon request by such entities, housing 
     finance agencies, or affiliates, for the additional purpose 
     of providing assistance to State and local legal 
     organizations, including nonprofit legal organizations, whose 
     primary business or mission is to provide legal assistance, 
     for use for providing legal assistance to homeowners of 
     owner-occupied homes consisting of from one to four dwelling 
     units who have mortgages on such homes that are in default or 
     delinquency, in danger of default or delinquency, or subject 
     to or at risk of foreclosure, to assist such homeowners with 
     legal issues directly related to such default, delinquency, 
     foreclosure, or any deed in lieu of foreclosure or short 
     sale.
       ``(2) Prohibition on class actions.--No funds provided 
     under this subsection to a State or local legal organization, 
     including a nonprofit legal organization, may be used to 
     support any class action litigation.
       ``(3) Limitation on distribution of assistance.--
       ``(A) In general.--None of the amounts made available under 
     this subsection shall be distributed to--
       ``(i) any organization which has been convicted for a 
     violation under Federal law relating to an election for 
     Federal office; or
       ``(ii) any organization which employs applicable 
     individuals.
       ``(B) Definition of applicable individual.--In this 
     paragraph, the term `applicable individual' means an 
     individual who--
       ``(i) is--

       ``(I) employed by the organization in a permanent or 
     temporary capacity;
       ``(II) contracted or retained by the organization; or
       ``(III) acting on behalf of, or with the express or 
     apparent authority of, the organization; and

       ``(ii) has been convicted for a violation under Federal law 
     relating to an election for Federal office.
       ``(4) Authorization.--Amounts used as described under 
     paragraph (1) shall be deemed to be for actions authorized 
     under this title.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Capuano) and the gentleman from Nebraska (Mr. Terry) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.


                             General Leave

  Mr. CAPUANO. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days to revise and extend their remarks.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. CAPUANO. Mr. Speaker, I yield such time as she may consume to the 
sponsor of the bill, the gentlewoman from Ohio (Ms. Kaptur).
  Ms. KAPTUR. Thank you very much to my dear colleague, Congressman 
Capuano of Massachusetts, for yielding me this time in support of 
moving today H.R. 5510, the Aiding Those Facing Foreclosure Act, which 
merely allows technical clarification language to existing legislation. 
No authorization of funding or any expansion of existing funding is 
included in this bill.
  I would like to thank my colleagues on both sides of the aisle for 
their support and for bringing this forth today. In particular, I would 
like to thank Chairman Frank and Congressman Steve LaTourette for their 
ongoing efforts on behalf of homeowners facing foreclosure.
  Ohio is among those States labeled as the hardest hit in our Nation 
by the foreclosure and economic crisis, along with 18 other States. 
These states receive what is called ``hardest hit'' assistance funds.
  Ohio, among other States, wants the discretion to use a small amount 
of its existing funds under existing authorities to support legal 
advice through not-for-profit legal organizations to individual 
families facing foreclosure. However, Treasury interpreted that 
existing law didn't allow that. That is why we are here today--to 
clarify that, in fact, citizens of our Nation who are single-family 
homeowners do have the right to proper legal advice in such critical 
mortgage workout proceedings that affect their equity, that affect 
their family's home and their future.
  Millions of people have faced foreclosure across our Nation. Far too 
many are losing their homes without proper, necessary legal 
representation. Many even have no idea that they have legal standing in 
such property proceedings. At such a critical and emotional moment in a 
family's life, legal advice can help a family find the outcome that 
works best for them in a foreclosure proceeding. In today's very 
complex mortgage proceedings, it becomes daunting for affected 
homeowners to gain the legal advice necessary to navigate the 
increasingly complex world of distant banks and courts, which often are 
much more easily navigated by the mortgagor. And certainly the 
mortgagee should have similar legal rights as well.
  We appreciate the fact that the Treasury is sending a letter of 
support in furtherance of our efforts. Thus, I introduce this 
legislation as a legislative fix, H.R. 5510. For those States already 
receiving hardest hit funds, H.R. 5510 increases the State's ability to 
serve only single-family owner-occupied units that are facing default, 
delinquency, foreclosure, deed in lieu, or

[[Page H8624]]

short sale by permitting, if the State so chooses, to use hardest hit 
funds to support legal services offered by not-for-profit legal aid 
organizations.
  In sum, the bill does not require States to use funds to support 
legal aid or services. So there's no requirement. This language is only 
permissive. The bill does not permit funds to be used for class action 
lawsuits. It only applies to single-family owner-occupied units. The 
bill does not permit any organizations like ACORN or others that are 
not not-for-profit legal assistance groups to receive funding. Further, 
the bill does not take money away from any State that is already 
administering its funds. And the bill actually will help relieve 
pressure on the States that are not hardest hit as other funding 
becomes available in related housing programs in the future.
  So, let me be clear. There's no new money involved here. This is only 
giving the hardest hit States a new tool, if they so choose to use it, 
to fight foreclosures in their States and give proper legal standing to 
all parties involved. Nothing could be more important than allowing 
families facing foreclosure to be afforded proper legal assistance to 
rework their loan where that is possible.
  Please support passage of H.R. 5510, the Aiding Those Facing 
Foreclosure Act.
  The SPEAKER pro tempore. Without objection, the gentleman from 
Massachusetts (Mr. Frank) will control the time.
  There was no objection.
  Mr. TERRY. Mr. Speaker, I yield myself such time as I may consume.
  I rise on behalf of Ranking Member Spencer Bachus, the minority in 
opposition, strong opposition, to H.R. 5510.
  Mr. Speaker, here we go again. The American people have rightly 
demanded an end to the bailouts, but this outgoing Democratic majority 
just can't seem to let go. Just this past October, Secretary Geithner 
put out a lengthy report proclaiming the expiration of TARP, but it 
seems that the $700 billion bailout isn't quite dead yet.
  Just a week away from Christmas Eve, the Democratic majority is today 
attempting to bring the bailout back to life for the sole purpose of 
showering taxpayer money on community groups that provide legal 
assistance. The premises of reopening TARP for this purpose is 
troubling enough, but perhaps even worse is that we are bypassing any 
form of regular order to consider this this morning.
  We first received the text of this language, which is substantially 
different from the introduced version, at 9 a.m. this morning. No 
hearings were held on this legislation. No subcommittee or full 
committee markup. No CBO score has been produced. We have yet to 
receive any feedback whatsoever from the Department of Housing and 
Urban Development or from the President.
  We have heard that there's a letter of support, but simply the letter 
we've received from the Treasury is one outlining why they can't do it. 
In fact, there's been newspaper articles about how Secretary Geithner 
has blocked this from occurring. In fact, the General Counsel recently 
wrote that the proposed legal aid services are not necessary to the 
implementation or effectiveness of the hardest hit fund because 
Congress has provided other specific appropriations that funded the 
same type of legal aid processes or services proposed by the State and 
Federal; that legal aid services are not necessary or essential to the 
implementation of a loan modification program. The case has not been 
made that there are inadequate resources for legal assistance.

                              {time}  1120

  The American people expect better.
  The legislation before us today could conceivably result in billions 
of taxpayer dollars being pumped into community groups similar to the 
now defunct ACORN. That was not the purpose of the hardest-hit housing 
market's program nor was it contemplated by the original emergency TARP 
bailout. Even Treasury Secretary Geithner agrees with that point. TARP 
was designed to return all unspent funds directly to the taxpayer so 
that legislative efforts like today's wouldn't be possible. In theory, 
this legislation could prevent more than $7 billion from being returned 
to the taxpayers.
  Our goal should be to return as much taxpayer money to the taxpayer, 
not to invent new ways to make sure that we spend it. TARP was not 
designed to be a perpetual slush fund.
  The drafters of the 2008 TARP clearly understood how tempting it 
would be to have a $700 billion pot of money lying around, so they 
installed a firm expiration date for the program. That hasn't stopped 
this majority from attempting to use the emergency stabilization money 
for other purposes; but today's poorly crafted, non-vetted, redundant, 
duplicative, and perhaps unnecessary bailout is particularly egregious 
due to the process they followed.
  I urge my colleagues to reject this suspension, and if additional 
legal assistance moneys are required, go through regular order to prove 
it.
  I reserve the balance of my time.
  Mr. FRANK of Massachusetts. I yield myself such time as I may 
consume.
  Mr. Speaker, I salute the ``good soldier'' attitude of my friend from 
Nebraska. In the absence of any member on the Financial Services 
Committee, he agreed to stand up and read what was written. He has no 
way of knowing how silly it is. Nobody explained to him how inaccurate 
it was.
  For example, he says this has not gone through regular order. It is, 
in fact, exactly the same legislative language that was debated, 
amended and adopted in the House Financial Services Committee and then 
in conference during financial reform. It is exactly that.
  There is language in here that the gentlewoman from Ohio sensibly 
agreed to that makes it clear that organizations that have been 
convicted of criminal abuses can't be here, that only genuine legal 
services organizations can get this money and that there can be no 
class actions. It was carefully done. It's not the gentleman's fault. 
He wasn't there. I wish the people who had been there had told him 
that.
  This is the legislative language taken from a bill that went through 
the full legislative procedure and passed the House. In fact, there was 
a change because we told the gentlewoman from Ohio, who has been very 
diligent in this regard, that we thought it was best precisely to avoid 
that kind of argument and to take the language that had already been 
adopted in the committee, in the conference and on the floor of the 
House.
  Secondly, we are told it's going to cost extra money. No, it will 
not. In fact, it could save money. In the language that the House 
passed and the conference committee passed, we authorized $35 million 
for exactly this purpose.
  What the gentlewoman from Ohio is proposing is that we take money 
that has already been voted under the TARP and use it for that. The 
gentleman has been asked to characterize it as a ``slush fund.'' 
Hardheartedness has rarely come so close to the Christmas season. This 
slush fund is to go to working Americans who bought homes and who are 
facing foreclosure. Frankly, we were reasonably certain of this when we 
passed this earlier this year, but we now know there have been serious 
legal problems with the foreclosures. Some of them are merely 
paperwork. Others we have seen are documented abuses.
  You are a homeowner in trouble. You have the legal teams coming at 
you from the lenders, from the servicers and others. You cannot 
yourself afford a lawyer. You're having trouble meeting your mortgage 
payment.
  What we say is, We will give you access to a lawyer--not in the 
offensive way. There is no class action here. There is no legal suit 
that can be brought against the lenders. There maybe should be.
  This says, I'm being foreclosed. I don't think I should be 
foreclosed. They made a mistake. I paid that mortgage; or I got a 
modification. Somebody forgot it.
  All we're asking is, Can we take some money that has already been 
voted and let that person have a lawyer to go to court--a legal 
services lawyer, vetted by the local bar association--to defend him?
  To the Republican Party, that's a slush fund. I am appalled. I am 
appalled at the insensitivity and at the cruelty.
  By the way, I voted for the TARP money, along with Mr. Boehner, the 
incoming Speaker. They did it at the

[[Page H8625]]

request of President Bush. As for the bailouts they keep flailing 
about, every single bailout that exists in America today was initiated 
by President George Bush, every single one--AIG, the TARP, the 
automobiles. It was George Bush who did it, and George Bush, after the 
election conveniently, said that it was the TARP that saved the economy 
from the consequences, I think, of mistakes that had been made during 
his Presidency. So that's the bailout they are talking about.

  What we are saying is this:
  We put an end to any new money. Given existing money, given the clear 
documentation that there have been abuses and errors and even, in some 
cases, fraud in the foreclosure process--although, in some cases, they 
were just paperwork errors--this is for beleaguered homeowners who are 
trying to save their homes, who are trying to keep themselves and their 
families from being kicked out the of their homes in case there was a 
mistake at legal assistance. If everything is in order, the lawyers 
can't save them.
  What we are saying is, given what has been documented, let's take 
some of the money that has already been voted in the TARP--that's 
right. It has no CBO score--and put it there.
  Secretary Geithner told me personally that he supports this. I'm 
sorry the letter isn't here yet, but I think Members will accept the 
fact that I'm telling the truth when I tell you that I spoke to the 
Secretary and showed him what we were doing, and he supports it. The 
language has gone through the full legislative process. It is language 
taken from the bill.
  I hope we will pass this and also have the $35 million. This is for 
the hardest-hit States, the States that have had the worst impact. The 
$35 million could then be used for the other States. But again, a slush 
fund? It's a slush fund that can't go to ACORN. I know ACORN is a real 
focus for them.
  It, of course, validates the old saying: Great obsessions from tiny 
acorns grow.
  So every time we try to help any poor people with legal assistance so 
they are not faced with the unfair situation of being outgunned by an 
array of lawyers and they don't have any lawyers themselves to defend 
them, ACORN gets it. ACORN can't get this money on a number of grounds. 
There can't be class action suits.
  If there is a homeowner who is convinced that he or she is being 
unfairly foreclosed upon and could document errors, should that person 
be denied legal assistance from money already voted at the request of 
George Bush and with the support of Mitch McConnell and with the 
support of the incoming Speaker and with the support of the incoming 
majority leader? Should they not be able to use it?
  I wish this weren't partisan. People tell me, Why are things 
partisan?
  I wish things weren't partisan. I wish I could eat more and not gain 
weight. I wish a lot of things.
  We are here on a partisan situation because what ought to be obvious 
is that money already appropriated, knowing as we do that there have 
been abuses in the foreclosure process, ought to be available to 
appoint genuine lawyers to defend people. By the way, do you know legal 
services lawyers? They're among the most dedicated people you'll find. 
These people could be making far more money in private practice, but 
they're there to help out.
  They're restricted. There can't be class action suits. They can't go 
to a general organization that does legal work. They have to go to a 
genuine legal services organization, which are often, in my case, 
always supervised by the State bar association--and it is a slush fund.
  You know, I can understand some differences of opinion, but to demean 
it this way--to call it a ``slush fund''--to deny ownership of the 
bailout, which was, of course, a Republican administration policy and 
to characterize it that way, all we are saying is money already voted 
could be made available for genuine legal assistance to help people who 
are facing unfair foreclosures so they can go to court.
  The point is that we get this demeaning characterization. You know, 
we are supposed to be proud of our system of justice. We are not 
talking about giving anybody a free pass. What we are saying is working 
people who are facing foreclosure ought to be able to get to court on, 
not equal terms with the lenders and the large organizations opposing 
them, but with some bare minimum of representation--and that's a slush 
fund. That's a political trick.

                              {time}  1130

  I am very disappointed. We had real hopes that we could get some 
agreement on this. Everybody acknowledges that there have been abuses 
in the foreclosure process. We know there are people who can't afford 
lawyers. It will not cost the taxpayers any money. This is money that 
will be used elsewhere. It's a diversion from money that was otherwise 
going to be used in the TARP. It doesn't reopen the TARP. I hope it 
will add to the $35 million we hope we can get. It has been vetted 
through the legislative process. The gentlewoman from Ohio, who has 
been a great crusader on behalf of people in this situation, accepted 
our suggestion that she take the language that has already been voted 
on in the House.
  So I am disappointed, but I hope that party discipline will not 
prevail on the Republican side. People--particularly from those States, 
Ohio, California, Indiana, and Florida, where they are particularly 
hard hit, but everybody, because everybody will benefit if we can 
increase this pool--will say something that's apparently terribly 
radical to my Republican friends. Let's let members of legal assistance 
operations, supervised by their bar associations, subject to their 
supreme courts and the State's supervision, go to court to defend 
someone facing an array of high-priced legal talent when they know that 
they are being foreclosed upon illegally and inappropriately.
  And that is apparently a terrible thing to the Republican Party. I 
am, as I say, appalled. I hope that a sense of fairness will somehow 
prevail and we can pass this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. TERRY. Mr. Speaker, I yield myself such time as I may consume.
  I appreciate my friend from Massachusetts pointing out my good 
soldiering here, but there are certain things that I do know are facts, 
and that is: Taxpayers are already paying for legal services for the 
impoverished. It's the Legal Services Corporation. And the 
appropriation for this year, at least as it currently is listed, is 
$440 million.
  Perhaps what we're saying here is using the TARP fund as the vehicle 
and keeping TARP alive is the wrong process here. Perhaps this isn't a 
TARP or financial services issue. The right way is an appropriation 
issue.
  If the majority is upset that there is not enough money going to 
legal services for the poor, whether it's for foreclosures or other 
legal issues, the right path would be addressing the Appropriations 
Committee and asking for additional funds within an already existing 
process.
  Committee staff is not aware of whether or not Geithner has now said 
he is in favor of this bill. We don't know of any conversations, but we 
have no doubt to disagree with the gentleman from Massachusetts' 
statement that he has had conversations. We've heard about a letter, 
but we only have one dated September 13.
  Mr. FRANK of Massachusetts. Will the gentleman yield?
  Mr. TERRY. I yield to the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Yes, the letter is on the way. I state, 
as a matter of fact, that I personally spoke to Secretary Geithner and 
he told me, as I explained it, that he supports it.
  Does the gentleman doubt my word?
  Mr. TERRY. No, and I said I don't doubt your word. I said that.
  What we have here is a September 13 letter, but we've also heard that 
there is another letter, or maybe we are talking about the same letter.
  Mr. FRANK of Massachusetts. Will the gentleman yield?
  Mr. TERRY. I yield to the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. The letter you are talking about is one 
in which he says he doesn't have the legal authority to do it. This 
bill gives him the legal authority. There is no conflict. This bill now 
is a response to that letter. And I repeat that he has said that he is 
in favor of getting the legal authority to do it.
  Mr. TERRY. And reclaiming my time, that's the reason for our 
opposition here.

[[Page H8626]]

  The Treasury Department--it wasn't Republicans. It was their own 
administration and the Cabinet Member, Mr. Geithner, that said TARP 
doesn't have the powers to be a legal aid fund, so it takes them to 
have to change this.
  I kind of heard both things here, that if the administration was 
agreeing to this or saying that this was the right thing for TARP or 
that they had the powers, why was this bill even necessary? But let's 
say TARP was necessary, or this bill is necessary, because, as Geithner 
said in the September 13 letter, they don't have the power. So now, 2 
years after the fact, they want to change TARP to become a legal aid 
fund.
  I was part of the group that held out our votes because we wanted to 
make sure that this wasn't going to be a fund that was going to be 
continuously used, that every dollar that was going to be spent had the 
opportunity to be recouped so that the taxpayers at the end would not 
be out any dollars. This changes the whole philosophy of TARP for many 
people that voted for it.

                                   Department of the Treasury,

                               Washington, DC, September 13, 2010.
     Hon. Mary Jo Kilroy,
     House of Representatives,
     Washington, DC.
       Dear Representative Kilroy: I am writing in response to 
     your recent inquiries about the Housing Finance Agency 
     Innovation Fund for the Hardest-Hit Housing Markets (the 
     ``HFA Hardest-Hit Fund''). As you know, we designed the Fund 
     to support new and innovative foreclosure prevention efforts 
     in states--such as Ohio--that have been hardest hit by 
     housing price declines and high unemployment rates. I share 
     your strong commitment to maximizing the impact of the HFA 
     Hardest-Hit Fund and to helping responsible Americans keep 
     their homes.
       I also understand your interest in whether the HFA Hardest-
     Hit Fund can support legal aid services proposed by state 
     HFAs. It is critically important that struggling American 
     families receive accurate and helpful advice about how to 
     take advantage of the Administration's housing relief 
     efforts. Accordingly, I asked George Madison, the General 
     Counsel of the Treasury Department, to review the issue 
     closely. Mr. Madison has concluded that legal aid services 
     cannot be funded through programs such as the HFA Hardest-Hit 
     Fund that are authorized under the Emergency Economic 
     Stabilization Act of 2008 (``EESA''). I have enclosed a 
     detailed memorandum that analyzes the legal issues and 
     statutory limitations.
       Thank you for your attention to these critical issues. 
     Although we cannot use EESA funds to support legal aid 
     services, we are fully committed to working with you to 
     ensure that the HFA Hardest-Hit Fund successfully provides 
     targeted aid to struggling homeowners and encourages 
     innovative solutions to the housing downturn.
           Sincerely,
                                              Timothy F. Geithner,
                                        Secretary of the Treasury.
       Enclosure.


                                   Department of the Treasury,

                               Washington, DC, September 10, 2010.

                   Memorandum for Secretary Geithner

       FROM: George W. Madison, General Counsel
       SUBJECT: Funding of Legal Aid Services in connection with 
     the Housing Finance Agency Innovation Fund for the Hardest 
     Hit Housing Markets
       This memorandum addresses whether the Department of the 
     Treasury (``Treasury'') can support certain proposed legal 
     aid services using Troubled Asset Relief Program (``TARP'') 
     funds in connection with the Housing Finance Agency 
     Innovation Fund for the Hardest Hit Housing Markets (``FIFA 
     Hardest-Hit Fund'').
       We understand that you intend to share this memorandum with 
     Members of Congress.


                         I. Summary Conclusion.

       For the reasons discussed below, we have concluded that 
     legal aid services cannot be funded through programs such as 
     the HFA Hardest-Hit Fund that are funded under the Emergency 
     Economic Stabilization Act of 2008 (``EESA''). Legal aid 
     services are not specifically authorized under EESA. In 
     addition, the proposed legal aid services are not necessary 
     and incidental, as a matter of law, to the implementation or 
     effectiveness of the HFA Hardest-Hit Fund, because: (1) 
     Congress has provided other specific appropriations that fund 
     the same type of legal aid services proposed by the state 
     Housing Finance Agencies (``HFAs''); and (2) legal aid 
     services are not necessary or essential to the implementation 
     of a loan modification program.


                        II. Factual Background.

       Treasury has provided funding under EESA for the HFA 
     Hardest-Hit Fund for measures developed by state HFAs to help 
     homeowners in the states that have been hardest hit by the 
     housing downturn. Treasury has designated the HFA Hardest-Hit 
     Fund specifically for implementation in eighteen states, as 
     well as the District of Columbia. Each applicable state HFA 
     (or an eligible entity on its behalf) has developed a range 
     of programs tailored to the needs of its individual state and 
     has submitted funding requests to Treasury. Proposal 
     submission guidelines instruct the eligible state HFAs that 
     the proposed programs must ``meet the requirements of EESA.''
       Staff members from several eligible HFAs have expressed an 
     interest in funding certain types of counseling and/or legal 
     aid services. Accordingly, they requested Treasury's views on 
     the funding of these types of services. In response, we 
     communicated--through a law firm engaged by Treasury to 
     assist it with the implementation of the HFA Hardest-Hit 
     Fund--our conclusion that certain limited counseling services 
     are eligible for funding under EESA, but that the proposed 
     legal aid services are not eligible. This memorandum 
     describes Treasury's legal position in further detail.


                          III. Legal Analysis.

       As a general matter, government funds may be used only for 
     their intended purpose. EESA does not expressly authorize 
     payments for legal aid services. Section 101 of EESA 
     authorizes the Secretary of the Treasury to purchase 
     ``troubled assets from any financial institution.'' And 
     109(a) authorizes the Secretary to use ``loan guarantees and 
     credit enhancements to facilitate loan modifications to 
     prevent avoidable foreclosures.'' Consistent with this 
     authority, Treasury has specified that FIFA Hardest-Hit Fund 
     proposals must facilitate loan modifications using credit 
     enhancements in the form of payments to loan servicers, 
     investors, and borrowers.
       EESA does not cite, much less authorize, spending for legal 
     aid services. However, appropriations law does not require 
     that all government expenditures must be specifically or 
     expressly identified by Congress. It is well-settled that 
     when Congress makes an appropriation for an expressly-stated 
     purpose, it also authorizes by implication expenditures that 
     are ``necessary or incident to'' the implementation of the 
     expressly stated purpose.
       The Comptroller General of the United States has held that 
     three factors must be considered when determining whether a 
     federal government expense is necessary or incidental--as a 
     matter of law--to the implementation of the object of an 
     appropriation (in this case, the implementation of a mortgage 
     modification program under EESA). All three factors must be 
     satisfied.
       First, the expenditure must be ``reasonably related to the 
     purposes for which the appropriation was made.'' Second, the 
     expenditure ``must not be prohibited by law.'' And third, the 
     expenditure ``must not fall specifically within the scope of 
     some other category of appropriations''--in other words, the 
     expenditures are only authorized if they have not been 
     provided for more specifically by some other appropriation or 
     statutory funding scheme. The last requirement applies even 
     if the more appropriate funding source is exhausted and 
     therefore unavailable. If a federal agency funds an activity 
     under a broad appropriation, despite the fact that the 
     activity been specifically funded by another appropriation, 
     the agency would violate the Anti-Deficiency Act (31 U.S.C. 
     Sec.  1341).''
       In our view, the expenditure of EESA funds for legal aid 
     services under the HFA Hardest-Hit Fund is prohibited, 
     because it does not satisfy the third factor of the 
     Comptroller General's test. Congress has otherwise 
     appropriated federal funds for the same types of legal aid 
     services proposed by the state HFAs. This conclusion, by 
     itself, is dispositive and means the proposals cannot be 
     funded under the HFA Hardest-Hit Fund.
       In addition, we have concerns about whether the HFA 
     proposals satisfy the first factor of the Comptroller 
     General's test. Although the precise legal standard governing 
     this factor is unclear, numerous opinions require a close 
     nexus to a specific statutory purpose--i.e., that 
     expenditures be ``necessary'' or ``essential.'' We recognize 
     that typical legal aid services, such as those proposed by 
     the various state HFAs, are reasonably related to foreclosure 
     prevention efforts generally. However, we do not believe they 
     are necessary or essential to loan modification programs 
     under the HFA Hardest-Hit Fund.
     A. Legal Aid Services Fall Specifically within the Scope of 
         Another Appropriation.
       The third factor of the Comptroller General's test 
     prohibits the payment of any expenses if another 
     appropriation ``makes more specific provision for such 
     expenditures. In this case, the question is whether the legal 
     aid services proposed by the state HFAs fall within the scope 
     of other existing appropriations.
       The answer is yes. Congress has specifically provided funds 
     for legal aid services through annual appropriations to the 
     Legal Services Corporation (the ``LSC''). The LSC uses 
     appropriated funds to make grants to non-profit legal aid 
     programs, which in turn offer legal services to low-income 
     individuals and families. Those services include helping 
     ``homeowners prevent foreclosures or renegotiate their 
     loans.''
       Moreover, Congress recently authorized legal aid 
     specifically related to foreclosure prevention efforts. On 
     July 21, 2010, the President signed into law the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act, Pub. L. No. 
     111-517 (2010) (the ``Dodd-Frank Act''):
       Section 1498 of the Dodd-Frank Act authorizes HUD to 
     establish and administer a program that funds foreclosure 
     legal assistance to low- and moderate-income homeowners and 
     tenants related to home ownership preservation, home 
     foreclosure prevention, and tenancy associated with home 
     foreclosure;

[[Page H8627]]

       Section 1498(d)(1) requires that the legal assistance only 
     be provided to ``homeowners of owner-occupied homes with 
     mortgages in default, in danger of default, or subject to or 
     at risk of foreclosure;'' and
       Section 1498(f) appropriates to the Secretary of HUD $70 
     million for fiscal years 2011 and 2012 ($35 million each 
     year) for these legal aid grants.
       In short, Congress already has funded legal aid services 
     through existing appropriations and statutory funding 
     schemes. Accordingly, we believe that providing additional 
     funding for legal aid services under the HFA Hardest-Hit Fund 
     would be contrary to opinions of the Comptroller General and 
     it might violate the Anti-Deficiency Act.
     B. Legal Aid Services May Not Constitute a ``Necessary 
         Expense.''
       The first factor of the Comptroller General's test requires 
     that necessary and incidental expenses must be ``reasonably 
     related to the purposes for which the appropriation was 
     made.'' As previously noted, we are not relying upon this 
     analysis, because the HFAs' legal aid proposals clearly do 
     not satisfy the third factor of the Comptroller General's 
     test. Nonetheless, various Members of Congress and other 
     interested parties have raised questions related to this 
     issue. Therefore, we have considered it and concluded that 
     the legal standard may not be satisfied.
       Despite a ``vast number of decisions over the decades,'' 
     the Comptroller General has not applied the first prong of 
     its test in a clear and consistent manner.'' Instead, the 
     Comptroller General has used a variety of different 
     formulations when discussing the standard. ``If one lesson 
     emerges, it is that the concept is a relative one.'' 
     Nonetheless, in numerous opinions, the Comptroller General 
     has required a close nexus between a specific express 
     statutory purpose and any proposed expenditures--ie., the 
     expenditures must be ``necessary'' or ``essential.''
       In this case, legal aid services may be reasonably related 
     to foreclosure prevention efforts generally; however, they 
     are not necessary or essential to running a loan modification 
     program. Typically, legal aid lawyers who represent 
     struggling homeowners perform a variety of functions, other 
     than just negotiating mortgage modifications. For example, 
     legal aid lawyers represent borrowers in arbitration 
     proceedings against their lenders; file injunctions and 
     bankruptcy petitions to prevent foreclosure sales; and, when 
     foreclosure sales occur, file exceptions proceedings in state 
     court.
       Notably, the HFAs' legal aid proposals do not focus on 
     obtaining modifications under the HFA Hardest-Hit Fund or 
     under Treasury's Home Affordable Modification Program 
     (``HAMP'' ). Instead, they fall within two general 
     categories: using EESA funds to pay lawyers to 
     represent distressed borrowers in state foreclosure 
     proceedings, or using funds to provide general support to 
     legal aid programs related to foreclosure prevention. 
     Given the breadth of the proposals, legal aid services 
     frequently would result in outcomes other than loan 
     modifications. Accordingly, they are not--by definition--
     necessary or essential to loan modification programs under 
     the HFA Hardest-Hit Fund. Moreover, even if the HFAs' 
     proposals were more targeted, most borrowers can obtain 
     modifications without traditional legal services. That is, 
     there is no need for representation in court proceedings, 
     no requirement to file papers or cite legal authorities, 
     and no need to negotiate contracts (because the 
     modifications are standardized).
       We recognize that some Comptroller General opinions suggest 
     that expenditures merely need to be ``reasonably related'' or 
     ``contribute materially'' to an authorized statutory purpose. 
     Here, one could argue that a general statutory purpose of 
     EESA is to prevent foreclosures and that any expenditures 
     reasonably related to that purpose are permissible. We 
     believe that such an interpretation sweeps too broadly. It 
     would authorize an almost unlimited number and variety of 
     government expenditure--ie., anything that is reasonably 
     related to preventing foreclosures. It also would render 
     meaningless the express provisions in EESA that together 
     provide authority for the HFA Hardest-Hit Fund: Section 101 
     authorizes the Secretary to purchase ``troubled assets from 
     any financial institution,'' and 109(a) authorizes the 
     Secretary to use ``loan guarantees and credit enhancements to 
     facilitate loan modifications to prevent avoidable 
     foreclosures.'' Lastly, such an interpretation would be 
     contrary to how Treasury has implemented EESA.
     C. Certain Limited Intake and Follow-Up Services Are Eligible 
         for EESA Funding.
       Finally, it is instructive to compare the HFAs' legal aid 
     proposals to the much narrower intake and follow-up services 
     related to TARP-funded modifications that are provided by 
     homeowner counseling agencies. We previously have concluded 
     that these services satisfy the Comptroller General's test 
     and are eligible for EESA funding.
       Most HFAs have submitted proposals to Treasury that include 
     services narrowly tailored to obtaining modifications under 
     the HFA Hardest-Hit Fund programs, such as: (i) making 
     prequalification assessments of eligibility and submitting 
     the qualified applications to the HFAs; (ii) obtaining 
     supporting documentation from the borrowers and providing it 
     to the HFAs; (iii) ensuring that borrowers execute the 
     necessary documents for HFA Hardest-Hit Fund programs; (iv) 
     conducting post-closing meetings with borrowers receiving 
     assistance to ensure that they are complying with the HFA 
     Hardest-Hit Fund programs; and/or (v) verifying the steps 
     that the borrower has taken to find a job.
       In contrast to legal aid, these particular services do not 
     fall within the scope of other existing appropriations. 
     Moreover, they are ``necessary'' and ``essential'' to running 
     a mortgage modification program, within the meaning of the 
     Comptroller General opinions. The HFAs have represented that 
     in the absence of intake and follow-up services, both the 
     number of applicants and the number of approved participants 
     will be materially smaller. These services are necessary for 
     many borrowers to participate in the HFA Hardest-Hit Fund 
     programs, and it will be very difficult for many of these 
     programs to run effectively without such services. In 
     addition, intake and follow-up services are directly related 
     to the HFA Hardest-Hit Fund programs. They will neither be 
     available to nor assist applicants to other, non-TARP funded 
     programs.


                            IV. Conclusion.

       We recognize that legal aid services--such as representing 
     a borrower in court to avoid a foreclosure, or advising a 
     borrower about his or her legal rights--may be helpful to 
     preventing foreclosures. However, EESA does not expressly 
     authorize payments for such services, and Congress has 
     provided other federal funds for the same types of services 
     proposed by the HFAs. Moreover, unlike the specific 
     counseling services that HFAs have proposed, legal aid 
     services are not necessary or essential to the implementation 
     of the particular HFA Hardest-Hit Fund programs, within the 
     meaning of the Comptroller General opinions. For all these 
     reasons, Treasury has determined that legal aid services are 
     not eligible for EESA funding from the HFA Hardest-Hit Fund.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as 
I may consume.
  Well, apparently the gentleman from Nebraska, having denounced those 
bailouts, now tells us he voted for it. So it's confession time before 
the House. He apparently voted for the measure that he characterizes as 
a ``bailout'' that was such an imposition.
  Secondly, I have never heard anything more confusing than this 
discussion of the letters. Yes, the Secretary wrote and said, I don't 
now have the authority. And we then said, Okay. We will give you the 
authority.
  Mr. TERRY. Will the gentleman yield?
  Mr. FRANK of Massachusetts. I yield to the gentleman from Nebraska.
  Mr. TERRY. We were referring to the gentlelady from Ohio's statement 
on the floor that she has a letter saying that they support this. We 
have not seen a letter that says that.
  Mr. FRANK of Massachusetts. I know you haven't seen the letter. I 
told her that the Secretary told me the letter is coming. The letter is 
now being cleared by OMB. So we don't have the letter yet--the letter 
has been written--but I can tell you the Secretary says he wants it.
  The gentleman's discussion of the letter is totally confused--and 
confusing, as a consequence.
  Yes, there was a letter saying we don't now have the authority. This 
gives them the authority, which they welcome. Secondly, this does not 
extend the TARP at all. This does not extend the TARP in any way. And 
as to getting repaid, there is legislation that we added to the TARP 
that requires that at the end of the TARP program, 5 years from the 
date of it, 2013, the President must submit to us legislation that 
gives us a way to get it back from the financial services industry.
  So, yes, this will be repaid to the taxpayer by the financial 
services industry. By the way, the TARP is now down to a total of 25. 
This does not add $1 or 1 day to the TARP, either in its lifetime or in 
its funding.
  The gentleman said, well, there is money in legal services. Yes. The 
legal services appropriation last year was passed before we understood 
the extent of the mistake, the fraud, and the abuse in the foreclosure 
process. That is exactly right. The $400 million in legal services did 
not anticipate what we have since learned about abuses in the 
foreclosure process.
  Finally, the gentleman said do it through the appropriation. We have 
done that as well. We have asked for $35 million additional. By the 
way, this is not extra money. The appropriations would be additional 
money. But I will look forward to their support when that happens.
  Mr. Speaker, I would now yield 3 minutes to the gentlewoman from Ohio 
(Ms. Kilroy).

[[Page H8628]]

  Ms. KILROY. I thank the chairman, and I thank the gentlelady, my 
colleague from Ohio, Congresswoman Kaptur, for bringing this bill 
forward.
  You know, the hardest hit funds were put into place with the 
intention of assisting and helping people in States that have been hard 
hit by the foreclosure crisis that has enveloped this country, States 
like Ohio that have been hit for years over and over again with record 
foreclosures.
  We have tried various ways to assist in this issue, and the President 
and the Treasury came up with and we approved the Hardest Hit Fund 
Program, H.R. 5510. That allows States to put together a plan for how 
they want to address the issue of foreclosures inside their own State. 
The States need to agree.
  Now, some States wanted to include legal services in their plans and 
were not able to do it. States like Ohio were not able to do it, even 
though the use of attorneys in the process can be a very cost effective 
and useful way of moving the cases forward, of coming to agreement, of 
helping people come up with a plan and helping the banks to agree with 
it. Sometimes they are needed because there are egregious abuses on the 
other side in the foreclosure process that need to be addressed. But 
sometimes, in counties like mine, Franklin County, Ohio, where, when I 
was a county commissioner, we set up a court mediation process for 
foreclosures, lawyers are needed and useful in, again, bringing the 
parties together and helping them resolve the issues with respect to 
their mortgages, their refinancing, and their ability to keep their 
home, which is a major investment in their life. And keeping people in 
their homes also helps our communities. It helps our neighborhoods, 
because every time we have a foreclosure, we see crime going up and we 
see the value of their neighbors' properties going down.

                              {time}  1140

  This fix to allow Treasury to approve plans submitted by States that 
want to use legal services will help this process move forward in an 
effective, just, and cost-effective way.
  I thank the gentleman.
  Mr. FRANK of Massachusetts. How much time is remaining?
  The SPEAKER pro tempore. The gentleman from Massachusetts has 2 
minutes remaining, and the gentleman from Nebraska has 10\1/2\ minutes 
remaining.
  Mr. TERRY. Mr. Speaker, I yield 3 minutes to the gentleman from Ohio 
(Mr. LaTourette) who was actually a sponsor of the bill.
  Mr. LaTOURETTE. Mr. Speaker, I wasn't going to come over and talk on 
this bill this morning, but there's some things that are upsetting me 
as we wind down this lame duck session, and I think there's one 
merciful thing that could happen around here--this lame duck ought to 
be killed because nothing good's occurring at the moment.
  But this particular bill, I am a proud cosponsor of this bill with 
Ms. Kaptur and I commend her for moving this legislation; and as a 
matter of fact, we were engaged in some conversations last night to 
clear it for unanimous consent. That didn't quite work out because 
there are, as you know from the debate today, some objections.
  But I have to say that having listened to the discussion, the 
objections fall short, in my estimation. This bill doesn't extend TARP. 
By the way, for the record, I voted against TARP despite the fact that 
President Bush wanted us to vote for it, Secretary Paulson and a number 
of our leadership. I thought it was a bad idea, continue to think it's 
a bad idea even though some people say it saved America. Bad idea 
because it had no rules. We're going to do this--no, we're going to do 
that--we're going to buy banks, whatever.
  But, anyway, so the money is already out there, however, and all this 
bill does is say that States may have an option, if they choose, to 
take some of the money in the hard hit fund and allow people who are 
being foreclosed upon unjustly to use those funds for legal 
representation. No class action, no ACORN, no peanuts, no nothing. I 
mean, this is a clean bill when it comes to that, and I think that we 
are letting form subsume substance.
  Yesterday, I was on the floor and I was a cosponsor on a piece of 
legislation with the gentlelady from Minnesota (Ms. McCollum) that 
would have just moved money, no new money, would have moved money so 
that societies that are coercing young girls into marriage, we could 
build them latrines so they could go to school or we could make sure 
that they could stay in school so they're not forced into marriage at 
the age of 12 and 13. All of a sudden, there is a fiscal argument. When 
that didn't work, people had to add an abortion element to it.
  Look, this is a partisan place. I'm a Republican. I'm glad that we 
beat their butt in the election and we're going to be in the majority 
next year. But there comes a time when enough is enough, and McCollum's 
bill was a good bill last night. Kaptur's bill is a good bill today. We 
should stop the nonsense, approve the bill and move on.
  Mr. TERRY. I yield myself such time as I may consume.
  The point here is there's an appropriate vehicle and this isn't it. 
We already have taxpayers paying into legal services. Perhaps there 
should have been more money in there, but we didn't go through an 
appropriations process for this area this year. That was the majority's 
decision here. We can have this argument and debate, but that's the 
proper course here. And it needs to go through regular service. This is 
not.
  Enough is enough. My friend from Ohio is right, enough is enough. 
Let's let TARP die. We want it gone. It served its purpose. Let's not 
keep it alive. Let's use the appropriate ways to do this, which is 
Legal Services Corporation.
  I yield back the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield the balance of my 
time to one of the single most effective fighters against unfair 
foreclosures on our committee and among the leaders in the Nation, the 
gentlewoman from California (Ms. Waters).
  The SPEAKER pro tempore. The gentlewoman is recognized for 2 minutes.
  Ms. WATERS. Thank you very much.
  Mr. Speaker and Members, I'd first like to thank Barney Frank for all 
of the efforts he's put into helping homeowners and the leadership that 
he's provided on this committee, the Financial Services Committee.
  I'd like to thank Marcy Kaptur. She has been a stalwart, not on the 
committee but working every day because she's in one of the hardest hit 
States, but so am I in California.
  It is unthinkable that we could have used TARP funds for every major 
corporation, all of the banks, all of the too-big-to fail, and yet we 
would deny homeowners in the heart of his State some assistance. What 
are we saying? These are people who have followed the American Dream, 
and we have found that all kinds of exotic products were put on the 
market. Many of them were tricked into signing on the dotted line, and 
now we have whole communities that are being boarded up, that are in 
foreclosure, communities that are being driven into the ground because 
cities can't afford to keep them up.
  We've done everything that we could do. We had the NSP. We have 
assistance to unemployed folks. We're trying to do everything with not 
a lot of help from the administration or from the regulatory agencies 
in general.
  The HAMP program simply has not worked. We need to send a message and 
a real substantive message to the people and homeowners of America that 
we care about them. We don't want them put on the street. We don't want 
them losing their homes. The services or the too-big-to-fail banks, 
everybody has made out on the backs of the American public. What's 
wrong with using some of the TARP money for legal assistance?
  People are trying very hard to fight these battles alone. They can't 
get in touch with the services. They're trying to figure out where the 
notes are, who really owns the mortgages. We have found that all kind 
of robo-signing is going on. This whole industry has failed us and we 
are allowing these homeowners to swim out there alone by themselves 
with no help.
  Let's help the American people. This is the least that we can do as 
we close out this 111th Congress. We can not only send this message, 
but we could stand up and demand that they get the kind of help that 
will keep them and their families in their homes.
  Mr. FRANK of Massachusetts. Mr. Speaker, I would like to submit the 
following letter from

[[Page H8629]]

the Secretary of the Treasury Timothy Geithner to Congresswoman Marcy 
Kaptur:


                                    Department of the Treasury

                                Washington, DC, December 17, 2010.
     Hon. Marcy Kaptur,
     House of Representatives,
     Washington, DC.
       Dear Representative Kaptur: I am writing in support of your 
     proposed legislation, the ``Aiding Those Facing Foreclosure 
     Act of 2010'', H.R. 5510, as amended for consideration under 
     suspension of the Rules.
       This legislation would permit the funding of legal aid and 
     other services to struggling homeowners through the Housing 
     Finance Agency Innovation Fund for the Hardest-Hit Housing 
     Markets program (``Hardest-Hit Fund''). Under current law, 
     funds available under the Emergency Economic Stabilization 
     Act of 2008, which are being used to finance the Hardest-Hit 
     Fund, cannot be used for legal aid services. If the 
     legislation is enacted, I believe Treasury would have the 
     authority to approve proposals for Hardest-Hit Fund monies 
     that were Previously allocated to states to be used for legal 
     aid services to homeowners.
       I appreciate your ongoing commitment to this critical 
     issue.
  Mr. JOHNSON of Georgia. Mr. Speaker, I rise in support of H.R. 5510, 
the Aiding Those Facing Foreclosure Act, which would redirect bank 
bailout funds to help struggling homeowners stay in their homes.
  Mr. Speaker, the American people are deeply frustrated with the 
financial services industry. The same lenders who begged for taxpayer-
funded welfare to survive their own mistakes now carelessly and 
summarily throw American families out of their homes. When they came to 
Congress hat in hand, having imperiled the global economy, they 
implored us to bail them out with claims that the American people would 
suffer if they were allowed to fail. Now, once again boasting record 
profits, they are throwing the American people under the bus.
  I applaud the distinguished gentle lady from Ohio, Ms. Castor, for 
her courageous efforts to produce this bill, which would take bank 
bailout money and put it to good use assisting homeowners who face the 
nightmare of foreclosure.
  I opposed the bank bailout known as TARP in 2008. I am pleased now to 
support redirecting those funds to a better cause.
  I urge swift passage of H.R. 5510, a common sense bill that serves 
the public interest, not the rich, powerful, and connected.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Massachusetts (Mr. Capuano) that the House suspend the 
rules and pass the bill, H.R. 5510, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. TERRY. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

                          ____________________