[Congressional Record Volume 157, Number 36 (Thursday, March 10, 2011)]
[House]
[Pages H1678-H1691]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FHA REFINANCE PROGRAM TERMINATION ACT
The SPEAKER pro tempore. Pursuant to House Resolution 150 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the consideration of the bill, H.R. 830.
{time} 1225
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the bill
(H.R. 830) to rescind the unobligated funding for the FHA Refinance
Program and to terminate the program, with Mr. Bass of New Hampshire in
the chair.
The Clerk read the title of the bill.
The CHAIR. Pursuant to the rule, the bill is considered read the
first time.
The gentleman from Alabama (Mr. Bachus) and the gentleman from
Massachusetts (Mr. Frank) each will control 30 minutes.
The Chair recognizes the gentleman from Alabama.
Mr. BACHUS. Mr. Chair, I yield myself such time as I may consume.
Mr. Chairman, just this week the American people received some very
sobering news. The budget deficit for the month of February alone is
$223 billion. That is $8 billion every day. That is money that we are
having to borrow from countries around the world.
It wasn't long ago that our budget deficit for the entire year was
only $220 billion. But thanks to a Washington spending binge that has
occurred over the last 4 years, now our monthly budget deficit is
larger than our annual deficit used to be. In fact, February's budget
deficit was the largest monthly budget deficit in the history of the
United States. Larger in real dollars than when we were fighting for
our existence during World War II. Higher than the Civil War. And that
has happened even though government receipts posted an increase this
February from last February.
Our national debt in the last 4 years has doubled. Now think of that.
In the first 220 years of our existence, we incurred a national debt
which, in the last 4 years, we've doubled. And by the end of this
administration, unless we take action today--action the American people
asked us to take last November--we will have tripled the deficit.
In 7 years or a little less than 7 years, we will have tripled our
deficit.
That's why we're here on the floor today, because the American people
have sent us a message. They said, ``Don't spend us into a financial
oblivion. We have to balance our own budgets at home. We expect the
same from those that we send to Washington to represent us.''
The bill that we're debating today is an example of two things: too
many government programs--spending programs--and too many ineffective
government programs. It is a poster child for both.
It's also an example of a broken promise. In 2008, during our
financial meltdown, which has led to a recession and record
unemployment, we promised the American people that those steps that
were taken, that that money that was loaned, would be paid back to the
national Treasury.
{time} 1230
I am happy to say that today most of the money that was lent to what
some have called a Wall Street bailout, what the American people
certainly call a bailout, it has been paid back with interest, but it's
not found its way into the national Treasury. It's not been paid back
despite promises to the American people on this very floor of this
House a little less than 3 years ago.
Instead, that money has been diverted into all sorts--and that's the
TARP bailout money--it's been used for other social programs, just what
many warned on the floor of this House would happen. It's turned into a
slush fund. And one of the programs that it has funded is a well-
intentioned program in which $8 billion, that's 8,000 million dollars,
has been designated for the FHA Refinance Program. Now, the FHA program
today, the reserves are low. And that's a program that is not in the
greatest of shape. It's like most government programs. Eight billion
dollars for a program to allow homeowners who are underwater on their
mortgages to get a reduction in their mortgage.
Now, not all can take advantage of this program. There are what the
American people have come to know as winners and losers. With all
government programs, it seems that some benefit, but 99 percent of
Americans don't benefit. And that's what's happened here. The
administration said we'll literally have hundreds of thousands of
people that will line up for this program. But because lenders and
borrowers are getting together and working out, or some homeowners are
deciding that they can't afford their mortgage and they're selling
their houses, 42 American families have been assisted by this program.
Now, this is a program that authorizes $8 billion. And $50 million
has actually been set aside and disbursed. In fact, the budget that the
President has submitted has a $50 million subtraction there for a
program that's helped 42 families; $50 million, 42 families. But think
about this. How many families are underwater? How many American
families have a home where they owe more than the home is worth? Twelve
million, somewhere above 11 million--let's say 12 million.
That means that even if this program could have helped 100,000 that
it would help 1 out of every 120 American families. One out of 120. And
yes, some government employee sitting behind a desk would say you are
eligible, you can apply, you win. At the most, all the programs we're
going to consider this week and next week, which if we act, will save
the American taxpayers billions and billions and billions of dollars,
all of them will benefit only an estimated 500,000 families.
As the Inspector General has said, about 50 to 60 percent of those
families, even if it goes to families--as we found out yesterday in a
hearing, a lot of it is going to nonprofit groups. In Los Angeles
alone, more went to a nonprofit group than went to the county
government. But we are only helping 1 out of 22 families. What about
those other 21 families? They're making their mortgage payment, and
they're not asking the government for help.
It seems that we're in a country where the majority of Americans
aren't underwater; about one-fourth are. But out of all those, we're
starting programs to help in this case 42 families, in another case
200,000 families. And we're asking every American family, and we're
asking their government, to start programs when we don't have enough
money to finance the programs we have.
But more than that, I put a photograph up. And this is the bottom
line on this program. Fifty million dollars has been put into a fund,
and $8 billion has been authorized for this program. And it's money we
don't have. And it's
[[Page H1679]]
money we won't pay back. It's those children in that photograph. It's
our constituents' children and grandchildren that will have to pay that
back.
Our national debt is $12 trillion--$14 trillion. You memorize a
number, and in a few months it's irrelevant. It's no longer the real
number. Robert Gates on January 6, in outlining the Pentagon's budget,
said, ``This country's dire fiscal situation and the threat it poses to
American influence and credibility around the world will only get worse
unless the U.S. Government gets its finances in order.'' Well, who will
get it in order? It has to be the President and this Congress. That's
his quote January 6.
The Joint Chiefs of Staff say that our national debt is a national
security problem. But the message just doesn't seem to get to this
floor, because today people will come to this floor and say, oh, if we
get rid of this program everybody that can't pay their mortgage needs
to call their Congressman and say you need to pay my mortgage, or there
needs to be a government program to pay my mortgage. Well, let's not
kid ourselves. Those children, that's who we are obligating. Last year
we could stand on the floor and say that they each come into this world
owing $35,000. Today it's $45,000.
Today we're going to have to make some hard choices for them, for our
children and our grandchildren. And oh, yeah, these programs do some
good. Although for most homeowners who can't pay their mortgages and
they're given a reduction, it doesn't work. The default rate in most of
these programs is over 50 percent. One of the programs we will consider
tomorrow, out of every dollar of taxpayer money lent, 98 percent is
never repaid. Never repaid. How can a country continue to function like
that? What kind of future do these children have?
I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield myself such time as I may
consume.
First, for people trying to follow this, the gentleman from Alabama
has confused several programs in this conversation, most of which
aren't up today. We are dealing with one at a time. He talked about
money that went to Los Angeles and went to a group instead of the
county. That has zero to do with today's program. Zero. And in fact, it
doesn't have to do with individual homeowners. It's a program that
gives aid to municipalities, which we will be debating later, probably
next week, which gives aid to municipalities to deal with property that
they have been stuck with. So it has nothing to do with today.
But the gentleman does make a good point about the deficit.
Unfortunately, he does not put his votes where his rhetoric is. The CBO
says that this program is going to cost not $8 billion, but if it's
fully operational over a 2-year period, which is its life span, will
cost $175 million.
{time} 1240
Now, that's money. But do you know what it is? It's much less--and
the gentleman from Alabama voted during that same period to send money
to the cotton farmers of Brazil. We do have a debate about the deficit
here, but it's not about whether to reduce it. It's how.
The gentleman from Alabama, along with the majority of Republicans
voting, defeated an amendment--with some Democrats, although the
majority of us voted for the amendment--to stop sending American tax
dollars to subsidize the cotton farmers of Brazil. In the 2-year period
during which we will be dealing with this program: Brazilian cotton
farmers--$300 million. Americans facing foreclosure--$175 million. The
gentleman from Alabama has a very odd way of saving money on the
deficit.
Then he says we have winners and losers. Well, among the big winners
under the Republican budget and with the majority of their votes are
the farmers who receive more than $250,000 per year in subsidy.
Whatever happened to free enterprise? Whatever happened to standing on
your own? An amendment was offered to limit to a measly $250,000 the
subsidy any one entity could get. The gentleman from Alabama voted
``no.'' That was too harsh. The gentleman from Alabama is for unlimited
amounts of subsidy to go to a handful of farmers--but no--we can't
spare much less than that over the time period because, in the time
period of this bill, that would have cost $200 million, or $100 million
a year.
Then the gentleman quoted the Secretary of Defense, that we should
pay more attention to the Secretary of Defense because he, along with
many Republicans, voted to force money on the Secretary of Defense that
he didn't want. He voted to fund the programs the Secretary of Defense
didn't want. He's trying to get some reprogramming now, but the
Republican Appropriations Committee won't allow it. By the way, I don't
agree with the Secretary of Defense fully on this either.
I disagree with the gentleman from Alabama and the Secretary of
Defense because they don't want to spend $175 million in 2 years trying
to deal with foreclosures in American cities. Instead, they want to
send more than twice that amount to Afghanistan for its infrastructure.
You talk about inefficiency. Does anyone think that President Karzai
and his administration are going to spend the $400 million my friend
from Alabama has voted to send toward Afghan infrastructure projects
better than we would spend it here?
How about $1.2 billion for the Iraqi security forces at a time when
American municipalities are having to lay off police officers and
firefighters and other essential employees? The gentleman from Alabama
voted to send $1.2 billion to the Iraqi security forces. Does anyone
here have a great deal of confidence in how efficiently they'll spend
it?
Now let me address a couple of mistakes the gentleman made
specifically about this program:
The $50 million is not being spent on 40 people; $50 million hasn't,
in fact, been spent at all. Not a penny has been spent. The $50 million
was reserved out of TARP money to cover losses if they were to occur.
The CBO does say, yes, if this program is fully funded and if it gets
the participation they expect, the total amount of losses will be $175
million, not $8 billion. The $8 billion was a resurrection on the TARP
for technical reasons. The CBO says, full scale, this will cost $175
million--again, less than the gentleman of Alabama wants to send during
that period to Brazilian cotton farmers.
Now, as to the people who vote consistently, as some do, to cut money
for Afghan infrastructure or for Iraqi security forces or for Brazilian
cotton farmers or for American cotton farmers or for other recipients
of subsidy who then are opposed to this program, I honor their
integrity. I disagree with them in some ways, but I honor it. Yet I
cannot accept the lecture on fiscal responsibility from someone who
votes to lavish money in wasteful ways on Afghan cities but begrudges
it in American cities; who would send it for Iraqi police officers but
not for American police officers; who would send it to cotton farmers
and to other farmers in America but not to struggling homeowners.
This program has started slowly. By the way, there's a great
contradiction between saying it has only helped 40 people and that it's
going to cost $8 billion. If the pay starts to increase, it won't cost
the full $175 million, but here's what we hope:
There are negotiations going on now to allow people the benefit of a
refinancing. The gentleman says it's not going to take care of
everybody. Of course not. There is not one program that is fit for
everybody. There are a series of programs for people in different
circumstances, and this is one for people who could benefit from a
lower interest rate and a refinancing but who are under water and can't
do it. It induces the financial institutions to do it. It's voluntary.
If financial institutions find this is unreasonable, they won't do it.
There is an effort going on now to achieve a negotiated settlement
involving the services of financial institutions, many of which are
quite culpable and have misbehaved in this process, so these are not
innocent victims being shaken down. The Attorneys General of every
State, Republican and Democrat, and the regulators are trying to come
up with a solution.
This is the other point that gets lost in the rhetoric when the
gentleman who was so eager to send money to Brazilian cotton farmers
begrudges a small amount going to Americans facing foreclosure, which
is that the foreclosure crisis is not just a crisis of individual
families. It's a national economic problem. It's a macroeconomic
[[Page H1680]]
problem. To the extent that we do not do something to retard the rate
of foreclosure, then we make it harder to get out of the economic bind
in which we have found ourselves, which, as the gentleman correctly
said, started from the meltdown of 2008, and we have been getting out
of that at too slow a pace. Dealing with foreclosures is a part of it.
This program has not yet become fully operational--and it may never
be--but it is here to be used as a tool, especially if we are ever to
get the agreement among the Attorneys General from both parties, the
regulators and the financial institutions. It is a responsible way to
deal with this. It will cost less than many of the unnecessary
agricultural subsidy programs.
I've got to say, Mr. Chairman, that I've got to go reread. Maybe I
missed a footnote. I know there are these great free market economic
texts by Ludwig von Mises and Friedrich Hayek and others. They talk
about free enterprise, about keeping the government out of business,
and about letting the free market work. Apparently, there is a footnote
that says, oh, except agriculture. Overwhelmingly, my Republican
colleagues preach this to working people, to people in urban areas and
to people in other jobs, but it doesn't apply to cotton farmers or to
wheat farmers or to corn farmers or to grain farmers. Billions of
dollars go to them.
As a matter of fact, as the gentleman from Alabama said with his
vote: How dare you limit some farmer to a mere $250,000 in entitlement
subsidies? Because agriculture is an entitlement, but they don't talk
about that. They want to talk about Social Security for the elderly,
but they don't want to talk about entitlements for agriculture.
I do believe we need to cut the deficit. I think we can cut back
substantially in what we're doing in Afghanistan and Iraq. We can cut
back substantially in agriculture. We can put limits elsewhere, which I
would like to do. I would throw in that I did not think it was a good
idea to reduce the estate tax that the heirs of William Gates and
Warren Buffett are going to have to pay. Although, to the credit of Mr.
Gates and Mr. Buffett, they didn't think so either. They weren't for
substantially reducing the estate tax on people who were going to be
inheriting--not earning--tens of hundreds of millions of dollars.
My colleagues over there, and some here, have supported all of that,
and then have said we cannot put a program out there that will help
Americans facing foreclosure--and not simply to help them but to help
the cities and to help the whole economy. There is a great consensus
among economists that dealing responsibly with foreclosures is the way
to deal with this.
So, no, please don't believe in $8 billion. It's not that. The CBO
says it's $175 million. And $175 million is considerable, but I will
repeat that it's less than my friends want to send to Brazil. It's less
than they want to send to build infrastructure in Kabul and Kandahar.
It's less than they want to spend to police Fallujah. You know, if I
thought that latter set of funds were going to be well used, I might
feel better about it, but we know how corrupt it is.
There is a double standard, let me say finally. Expenditures within
the United States are held to a very, very strict accountability, but
as to expenditures in Iraq and in Afghanistan and elsewhere in the
world, we know how much more wastefully and corruptly spent they are,
and that doesn't seem to bother other people.
I reserve the balance of my time.
Mr. BACHUS. I yield myself such time as I may consume.
Mr. Chair, if I were Ranking Member Frank, I would do exactly what
he's doing. I wouldn't talk about the fact that there are only 42
people who have been served by this program. I wouldn't talk about the
fact that only $50 million has been set aside. I wouldn't talk about
the $8 billion that has been authorized. I wouldn't talk about the fact
that the American people were told this money would be repaid into the
National Treasury. No. I would talk about the cotton subsidy, the deal
with Brazil. That deal sounds pretty bad. It really does. The ranking
member agrees.
{time} 1250
He kept talking about this the last month, about don't shut down this
ineffective program to help balance the budget because some of us voted
for the cotton deal with Brazil. Well, in fact, the majority of this
Congress, the overwhelming majority did.
But, let's talk about that deal. Who made that deal? Did the
gentleman from Alabama make that deal? Did the gentleman from Texas
that's going to speak on our side, did he make the deal? Did the
gentleman from Nevada make that deal? Did the gentleman from Illinois
(Mr. Dold) make that deal? No. The Obama administration made that deal.
The U.S. Trade Representative, Mr. Kirk, made that deal in an
agreement with the Brazilian Government, not your Republican
colleagues. Here's what he told us. He said that $60 billion worth of
trade depended on our ability to export into Brazil without the tariffs
they were going to impose on us. That's 420,000 U.S. jobs that were
threatened, and he told us that if we didn't do that, they would impose
billion $820 worth of countertariffs on such products as
pharmaceuticals, autos, electronics, textiles, wheat, fruit, nuts,
cotton, medical equipment. So he made a deal with them to make them
certain payments, to compensate for that.
Now, I don't know if he misrepresented. I don't think that President
Obama and his administration and his U.S. Trade Representative would
have misrepresented this. But if that was a bad deal, then the ranking
member ought to go over there and to complain to the President, whom he
defends, because both of them, apparently, want to spend money at every
turn and every chance they get.
U.S., Brazil Agree on Framework Regarding WTO Cotton Dispute
Washington, D.C.--Today Brazil's Ministers reached a
decision in support of a Framework regarding the Cotton
dispute, which would avert the imposition of countermeasures
of more than $800 million this year. This includes more than
$560 million in countermeasures against U.S. exports which
were scheduled to go into effect on Monday, June 21, 2010, as
well as possible countermeasures on intellectual property
rights that could have taken effect later. We are pleased
with this decision, and look forward to signing the Framework
soon.
The findings in the Cotton dispute concern U.S. cotton
support under the marketing loan and countercyclical payment
programs, and the GSM-102 Export Credit Guarantee Program. In
line with these findings, the Framework has two major
elements.
First, it would provide, as a basis for a discussion toward
reaching a mutually agreed solution to the dispute, a limit
on trade-distorting cotton subsidies. Second, the Framework
would provide benchmarks for changes to certain elements of
the current GSM-102 program. In the Framework, the United
States and Brazil would agree to meet quarterly to discuss
the successor legislation to the 2008 Farm Bill as it relates
to trade-distorting cotton subsidies and the operation of
GSM-102. The Framework would not serve as a permanent
solution to the Cotton dispute. However, it would provide
specific interim steps and a process for continued
discussions on the programs at issue with a view to reaching
a solution to the dispute.
``I am pleased that we have been able to negotiate a
Framework regarding the WTO Cotton dispute that would avoid
the imposition of countermeasures against U.S. trade,
including goods and intellectual property,'' said Ambassador
Kirk. ``While respecting the role of the United States
Congress in developing the next Farm Bill, this Framework
would now allow us to continue to work toward a final
resolution of the Cotton dispute. I believe this Framework
will go a long way in alleviating the uncertainty in our
business communities and enhance the ability of the United
States and Brazil to build upon our dynamic trading
relationship.''
``This framework agreement provides a way forward as we
work with Congress toward a new farm bill in 2012,'' said
Secretary of Agriculture Tom Vilsack. ``Although it is not a
permanent solution, I am pleased that it allows us to
maintain our programs while considering adjustments and
avoiding the immediate imposition of countermeasures against
U.S. exports as a result of the WTO cotton decision.''
BACKGROUND
The Cotton dispute is a long-running dispute brought by
Brazil against the United States. In 2005 and again in 2008,
the World Trade Organization (WTO) found that certain U.S.
agricultural support payments and guarantees are inconsistent
with WTO commitments: (1) payments to cotton producers under
the marketing loan and countercyclical programs; and (2)
export credit guarantees under the GSM-102 program, a USDA
program used to provide guarantees for credit extended by
U.S. banks or exporters to approved foreign banks for
purchases of U.S. agricultural exports.
On August 31, 2009, WTO arbitrators issued arbitration
awards in this dispute. These
[[Page H1681]]
awards provided the level of countermeasures that Brazil
could impose against U.S. trade. The annual amount of
countermeasures has two parts: (1) a fixed amount of $147.3
million for the cotton payments and (2) an amount for the
GSM-102 program that varies based upon program usage. Using
the data that we have given Brazil (in accordance with the
arbitrators' award), the current total of authorized
countermeasures is more than $800 million.
The arbitrators also provided that Brazil could impose
cross-sectoral countermeasures (i.e. countermeasures in
sectors outside of trade in goods, specifically intellectual
property and services). It may impose cross-sectoral
countermeasures to the extent that it applies total
countermeasures in excess of a threshold. The threshold
varies annually, but is currently approximately $560 million.
Therefore, of the approximately $820 million in
countermeasures Brazil could impose now, about $260 million
of that could be cross-sectoral.
On March 8, 2010 Brazil announced a final list of products
that would face higher tariffs beginning on April 7, 2010.
Goods on the list include autos, pharmaceuticals, medical
equipment, electronics, textiles, wheat, fruit and nuts, and
cotton. Brazil had not made a final decision on which U.S.
intellectual property rights might be affected by cross-
sectoral countermeasures, but it had begun the process to
make this determination.
On April 1, Deputy USTR Miriam Sapiro and USDA
Undersecretary for Farm and Foreign Agricultural Services Jim
Miller met with Ambassador Antonio Patriota, Secretary
General of Brazil's Ministry of External Relations to discuss
possible resolution of the dispute. As a result of that
dialogue, the Government of Brazil agreed not to impose any
countermeasures on U.S. trade at that time. In exchange, the
United States agreed to work with Brazil to establish a fund
of approximately $147.3 million per year on a pro rata basis
to provide technical assistance and capacity building to the
cotton sector in Brazil, and for international cooperation
related to the same sector in certain other countries. Under
the Memorandum of Understanding that the United States and
Brazil signed on April 20, 2010, the fund would continue
until passage of the next Farm Bill or a mutually agreed
solution to the Cotton dispute is reached, whichever is
sooner. The fund is subject to transparency and auditing
requirements.
The United States also agreed to make certain near term
modifications to the operation of the GSM-102 Export Credit
Guarantee Program, and to engage with the Government of
Brazil in technical discussions regarding further operation
of the program. In addition, the United States published a
proposed rule on April 16, 2010, to recognize the State of
Santa Catarina as free of foot-and-mouth disease, rinderpest,
classical swine fever, African swine fever, and swine
vesicular disease, based on World Organization for Animal
Health Guidelines, and to complete a risk evaluation and
identify appropriate risk mitigation measures to determine
whether fresh beef can be imported from Brazil while
preventing the introduction of foot-and-mouth disease in the
United States.
The parties further agreed on April 1 that they would work
to develop a Framework regarding the Cotton dispute by June
21, which would provide a path forward for a negotiated
solution to the Cotton dispute and allow both countries to
avoid the impact of countermeasures. Negotiators from Brazil
and the United States have been engaged intensively over the
past several months, and successfully concluded this
Framework.
Brazil is the United States' 10th largest trading partner
with a total two-way goods trade of approximately $60 billion
in 2009.
I yield such time as he may consume to the gentleman from Texas (Mr.
Canseco).
Mr. CANSECO. I thank the gentleman from Alabama.
Mr. Chairman, I am here to support the bill to terminate the FHA
Refinance Program. This bill is not about programs that work. It's not
about programs that have continually helped to create jobs and to help
our faltering economy and our laggard job growth.
This bill is about a failed government program, because the FHA
refinance program that went into effect in September of 2010 has failed
to work properly. By the end of December of last year, of 2010, a mere
22 mortgages had been refinanced through the program at a cost of $50
million. That's an average of $2.3 million per mortgage. The conclusion
is very, very clear. The program does not work and it's wasteful.
We are in an economic crisis. According to the Congressional Budget
Office, the Federal Government is set to run a deficit for fiscal year
2011 of $1.5 trillion. If serious steps are not taken right now, we are
set and ready to see in 2012 another trillion dollars added to our
deficit.
This river of red ink is not sustainable. Americans are coming to
grips with the fact that, if nothing is done, we will be the first
generation in American history to leave for our children a legacy of
insurmountable debt and economic stagnation.
And while there are a number of difficult decisions that we must make
in the months and years ahead, common sense dictates that we can begin
to get our spending under control by cutting programs that simply don't
work, no matter how large or how small they are or no matter how
beneficent they may sound. They just don't work. This one does not
work.
Many of my colleagues on the other side of the aisle often think that
we are just one government program away from solving our problems. But
when you think that way, you end up piling one government program on
top of another, wasting the taxpayers' money without even helping our
fellow citizens who are struggling in this day and age.
The last 2 years have proven that government programs and government
spending do very little in the way of stimulating jobs that we need
most and economic growth. We in the Congress of the United States have
a duty to be the stewards of the people's money, the people's tax
dollars. The least we can do is tell our constituents that we are doing
our job by cutting the stuff that does not work. This does not work.
Mr. FRANK of Massachusetts. I yield myself such time as I may
consume.
Two points: First, you have just heard a fantasy that $50 million has
been spent for 42 loans. That is not even remotely close to being true.
Fifty million has been set aside in a reserve for defaults if and when
they come. Not a penny of it has been given to anybody. It is simply
sitting in that account, in case, and the 42 loans have nothing to do
with that.
Yes, the gentleman from Alabama said I didn't talk about it. I did
talk about it. I corrected the misuse of the 50 million from last week.
He didn't misuse it today. And I mentioned that it started slow and it
may not get beyond where it is now. I mentioned that it is in reserve
to use it more. So, yes, we have only got 42. I talked about that.
The 8 billion is a fantasy. The CBO says at it's best, this is going
to cost $175 million. The 8 billion is a purely bookkeeping account.
But I want to get back to the fascinating explanation by the
gentleman from Alabama as to why he and the majority of Republicans
voted to send $150 million per year last year, this year, and for the
next couple of years to Brazil: Obama made him do it. Listen carefully.
The explanation for this expenditure to go to Brazil, that the poor
gentleman from Alabama voted for, is Barack Obama made him do it.
The President is a very convenient place for them to hide. In fact,
if he is asking me if I am critical of the President in that, yes, I am
critical of the President many times. I agree with him overall. But I
did not agree with him that we should send 1.2 billion for Iraq
security forces. The gentleman from Alabama did. I didn't agree we
should send $400 million for Afghan infrastructure.
The gentleman seems to think it's some major debating point because
the President takes the position that I disagree? Perhaps his view is
you always agree with the President of your party. It's not mine. It's
not a responsible way to legislate.
Secondly, there was an alternative to sending $150 million to Brazil.
We could have sent $150 million less to Americans. The finding was that
we were putting Brazilian cotton farmers at a $150 million disadvantage
per year because of the subsidy we gave to Americans. We could have
come in with legislation that would have reduced the Americans'.
So, in fact, I underestimated the waste of money that the gentleman
from Alabama is indulging because Barack Obama made him do it and he
was powerless to resist, apparently, because it's $300 million a year.
We had two options: We could keep the level of subsidy for American
cotton farmers and match that to the Brazilians, or we could reduce it
by $150 million in America and reduce it to Brazil over a 4-year period
when this will be in effect. That's over a billion dollars, a
considerable amount of money.
So, yes, it is true, the President sometimes makes unwise
recommendations, in my judgment. But the argument for the gentleman
from Alabama that he is to be absolved from responsibility for his
vote, and the majority of Republicans--the majority of us on our
[[Page H1682]]
side repudiated the President's position in this case. But the
gentleman from Alabama has claimed, Don't blame me; Obama made me do it
is no more credible than his invocation of some fantasy figures.
I reserve the balance of my time.
Mr. BACHUS. May I inquire of the Chair how much time each side has
remaining?
The CHAIR. The gentleman from Alabama has 11 minutes remaining, and
the gentleman from Massachusetts has 17\1/2\ minutes remaining.
Mr. BACHUS. I continue to reserve the balance of my time.
{time} 1300
Mr. FRANK of Massachusetts. I yield 5 minutes to the gentleman from
Massachusetts (Mr. Lynch).
Mr. LYNCH. I thank the ranking member.
I rise in opposition to H.R. 830, the FHA Refinance Program
Termination Act and also the other bills that will be coming to the
floor on the same subject.
I want to emphasize one thing that the ranking member has raised, and
that is that these are voluntary programs. These are all voluntary
programs that are trying to keep American families in their homes.
These programs require the banks to agree that this is a good deal and
it's deserving of these homeowners. These programs require that the
homeowner also agree, obviously, and also that in many cases that the
servicer agree.
Now, because you're requiring a voluntary agreement and an agreement
that has been crafted in such a way that all parties are balanced in
their interests, it's been difficult to generate the number of families
to be helped so far.
I do want to also emphasize that this program started in November.
This program started in November. We've had about 4 months to get
families on board to be helped by these programs. For much of that 4
months, we have had abject resistance from the servicers. They have
been the obstruction in making these programs work. But I am happy to
say that in the last 10 days, we have had three major servicers,
Allied, GMAC and Wells Fargo, that have finally come forward and said,
we're going to work within this program, and we're going to try to help
families stay in their homes not out of charity, but because they
realize that we need to put a floor under this housing market in order
to help sustain the weak economic recovery that we have going forward.
What exacerbates the situation is also the way the banks have handled
this up until now. In my district, and it's happened all across the
country, we've had situations where banks and servicers have employed
robosigners to the point where many of these foreclosure documents have
been signed without full knowledge by the individuals charged with that
responsibility. We've seen many courts in this country look at the
foreclosure process used by these banks and have ruled them to be
illegal and that, in fact, the banks did not own the homes that they
were trying to foreclose on. And this has happened thousands of times
across the country. It has not been a smooth process.
We've also had a very, very difficult situation for our men and women
in uniform. Despite the fact that there's been a law in this country
since World War I that we will not foreclose on servicemembers' homes
while they are in combat, while they are in Afghanistan or Iraq, we've
had banks do hundreds and hundreds of foreclosures on our men and women
in uniform. There are needs for these programs, and yet we are
conveniently forgetting those facts.
Lastly, this bill, with all due respect, has been poorly drafted in a
meaningful way. This bill, if adopted, would prohibit all voluntary
agreements between parties to stop these foreclosures. And I understand
what the targets of my Republican colleagues are, but the bill is
drafted so broadly it would prevent the banks, the FHA, the homeowner
and the servicer to come to a voluntary agreement.
Private enterprise has been something that my colleagues used to
encourage, and here we have voluntary agreements that will be
prohibited by this bill. And I do not think that is the intent of the
gentleman, however, that is the actual impact of his legislation. And I
have an amendment more specifically to deal with that at a later time.
But we have to slow down the foreclosure process to put a floor under
this economy. We have to help the families that can be helped. And this
FHA Refinance Program Termination Act would prevent that from
happening.
Mr. BACHUS. Mr. Chair, I yield 4 minutes to the gentleman from
Illinois (Mr. Dold).
Mr. DOLD. Thank you, Mr. Chairman, for yielding.
Mr. Chairman, H.R. 830 is commonsense legislation that stops
inefficient and ineffective government spending. At the outset of this
$8 billion program, its failure was inevitable. That inevitable failure
is now undeniable. It doesn't work for the homeowner, it doesn't work
for the taxpaying American families, and it certainly doesn't work for
future generations who are trying to claw their way out of the debt
that we are burdening them with each and every day.
So let's go back and let's talk about the homeowners. We've got 12
million mortgages in America that are currently underwater. And yet
this program, this program which was actually rolled out in March, it
started about 6 months ago, has 245 applications--245. How many have
actually made it over the hurdles and have gotten actually some help
and refinanced? Forty-four. Forty-four refinances. We've got $8.12
billion that has been obligated. We have $50 million that has been
disbursed.
Now, a quick back-of-the-envelope calculation, that's $1.1 million
per mortgage refinanced thus far. If we look at it even further, were
these million-dollar mortgages? Actually, the average mortgage was
about $300,000. So we spent, the American taxpayers, in terms of their
dollars, we spent $1.1 million in order to refinance a $300,000 loan.
The administration said that we're going to have 1.5 million homeowners
get into this program, and yet we've taken almost a year and we have 44
that have actually gone through.
If you were to get through this program, if you were one of the lucky
ones, one of the 44, clearly, it's not going to help you insofar as
you're going to destroy your credit for the next several years. The
average credit score of the 44 that are in the program was 711. That
credit score is going to go down. Is their monthly payment going to go
down? In many instances, no, because they're going to have to come up
with closing costs. They're going to have to pay private mortgage
insurance if they haven't been paying it already. And so there are
other requirements that are simply a burden on the actual homeowners.
It's time that we tell the American public the truth. It's time that
we in this body recognize when a government program is not working. We
need to get rid of this program--$8.12 billion obligated, $50 million
disbursed for 245 applicants and 44 mortgages actually redone.
The program certainly doesn't work for the American taxpayer. We're
looking at debts and deficits in Washington. And many of us were sent
here to Washington to try to get the out-of-control government spending
back in line. And I would say that certainly $1.1 million per mortgage
is not a good use of the taxpayer dollars.
When we look at future generations and we look at the amount of money
that we're spending right now, $1.48 trillion in deficit spending works
out to be over $3 million a minute. The President's budget comes out to
talking about 1.6 for the next year. We cannot continue to spend money
that we don't have. Our debt is at $14 trillion. When we actually took
a look at the Treasury report that came out just a couple of days ago
talking about TARP, because this program is basically on TARP funds,
they recognize that the mortgage modification programs were never
intended to be recovered. This, to me, I think is an enormous problem.
This is a program that doesn't work for the homeowner, it doesn't
work for the American public, and it certainly is not going to work for
future generations.
Mr. FRANK of Massachusetts. I yield myself 30 seconds simply to say
the gentleman has simply repeated an absolute fantasy. This is not a
$50 million expenditure for 40 loans. The $50 million has not been
given to anybody, not
[[Page H1683]]
a penny of it. It has been put in a reserve account. Fifty million has
been set aside in a reserve account. It was disbursed from the TARP to
a reserve account. The CBO, as I've submitted if this goes forward, it
will be about $12,000 per loan.
Last week, the gentleman from Illinois was claiming that if you
participate in this program, you would have a tax liability. He learned
that that was totally wrong. He is perpetuating error.
I now yield 2 minutes to the gentleman from California (Mr. McNerney)
Mr. McNERNEY. Thank you, Mr. Ranking Member.
I'm proud to represent much of San Joaquin County, which is the jewel
of California's Central Valley. Our valley is a great place to live and
work; but, unfortunately, we've been hit very hard by the economic
downturn. The valley has been ground zero for the foreclosure crisis.
Over the past few years, thousands of families in San Joaquin County
and throughout the valley have lost their homes.
{time} 1310
I hosted foreclosure workshops, and I met with hardworking people who
were misled by lenders who were struggling to stay on top of their
mortgages. I have seen grown men cry because they couldn't keep a roof
over their children's heads. I have talked to veterans who served their
country, only to return home to notices of default. And I have met
seniors on the brink of homelessness.
The administration's foreclosure prevention initiatives have fallen
short in the valley. Simply put, the administration's programs haven't
effectively served the people who are underwater on their mortgage, and
the administration hasn't been tough enough on the big banks. I call on
President Obama and his Cabinet to develop more effective efforts to
stem the tide of foreclosures.
But despite these shortcomings, the bill the House Republicans are
offering today is absolutely the wrong approach. It is throwing the
baby out with the bath water. Instead of canceling foreclosure relief
programs at their beginning stages, we should be strengthening them so
they are more effective. Mortgage counselors from my district advise
and plead to improve our efforts to get tough on big banks and provide
meaningful relief to families.
Stabilizing the housing market is critical to economic recovery and
creating jobs. For these reasons, I oppose H.R. 830.
Mr. BACHUS. Mr. Chairman, I yield 30 seconds to the gentleman from
Illinois (Mr. Dold).
Mr. DOLD. Mr. Chairman, running a business, I have to tell you,
obligated funds are one thing, disbursed funds are quite another. If I
can, from the monthly 105(a) report delivered to the Congress from TARP
and from the Department of the Treasury, and I will submit it for the
Record, under ``Obligated'' all of the way down here when it is talking
about the FHA refinance, it is $8.12 billion. And in an entirely
different column under ``Disbursed,'' it is $50 million. From the paper
here from the Department of the Treasury, obligated and disbursed are
different things. We have $50 million that has been disbursed.
FIGURE 1--DAILY TARP PROGRESS REPORT AS OF FEBRUARY 3, 2011
[$ billions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Principal/Investment Income/revenue
---------------------------------------------------------------------------------------------------------------------------------- Total cash
(*Dollars in billions*) Obligated Realized Gain/other Warrants Total back
Disbursed Repayments Write-offs loss Outstanding Dividends Interest income sold income
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bank Support Programs
Capital Purchase Program (CPP)
Preferred & Other Securities 179.89 179.89 146.08 2.58 0.00 30.88 9.45 ........... ........... 6.93 16.38 162.46
Citigroup Common............ 25.00 25.00 25.00 ........... ........... 0.00 0.93 ........... 6.85 0.05 7.84 32.84
Targeted Investment Program
(TIP)
Bank Of America............. 20.00 20.00 20.00 ........... ........... ........... 1.44 ........... ........... 1.24 2.67 22.67
Citigroup................... 20.00 20.00 20.00 ........... ........... ........... 1.57 ........... ........... 0.19 1.76 21.76
Asset Guarantee Program (AGP)
Bank Of America............. ........... ........... ........... ........... ........... ........... ........... ........... 0.28 ........... 0.28 0.28
Citigroup................... 5.00 ........... ........... ........... ........... ........... 0.44 ........... 2.25 0.07 2.76 2.76
Community Development Capital 0.57 0.57 ........... ........... ........... 0.57 0.00 ........... ........... ........... 0.00 0.00
Initiative (CDCI)..............
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Bank Program Totals..... 250.46 245.46 211.08 2.58 0.00 31.45 13.83 ........... 9.37 8.48 31.68 242.76
Credit Market Programs
Public-Private Investment
Program (PPIP)
Equity...................... 7.51 5.37 0.16 ........... ........... 5.21 0.40 ........... 0.00 ........... 0.40 0.56
Debt........................ 14.90 10.52 0.46 ........... ........... 10.06 ........... 0.10 ........... ........... 0.10 0.56
Term Asset Backed Securities 4.30 0.10 ........... ........... ........... 0.10 ........... ........... ........... ........... ........... ...........
Lending Facility...............
Purchase SBA 7(a) Securities 0.37 0.37 0.01 ........... ........... 0.36 ........... 0.00 0.00 ........... 0.00 0.01
(SBA)..........................
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Credit Market Program 27.07 16.36 0.63 ........... ........... 15.73 0.40 0.10 0.00 ........... 0.50 1.13
Totals.................
Other Programs
American international Group
(AIG)
Common...................... 47.54 47.54 ........... ........... ........... 47.54 ........... ........... 0.06 ........... 0.06 0.06
Preferred................... 22.29 20.29 ........... ........... ........... 20.29 ........... ........... ........... ........... ........... ...........
-----------------------------------------------------------------------------------------------------------------------------------------------------------
AIG Totals...................... 69.84 67.84 ........... ........... ........... 67.84 ........... ........... 0.06 ........... 0.06 0.06
Automotive Industry Financing
Program (AIFP)
GM.......................... 51.03 51.03 23.07 ........... 4.44 23.53 ........... 0.77 0.10 ........... 0.86 23.93
Chrysler.................... 14.43 12.37 3.85 1.60 ........... 6.92 ........... 0.58 0.06 ........... 0.64 4.49
Ally (GMAC)................. 16.29 16.29 ........... ........... ........... 16.29 2.00 ........... ........... ........... 2.00 2.00
-----------------------------------------------------------------------------------------------------------------------------------------------------------
AIFP Totals..................... 81.76 79.69 26.92 1.60 4.44 46.74 2.00 1.35 0.16 ........... 3.51 30.43
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Other Programs Totals... 151.59 147.53 26.92 1.60 4.44 114.57 2.00 1.35 0.21 ........... 3.56 30.48
Treasury Housing Programs Under TARP
Making Homes Affordable......... 29.91 0.94 ........... ........... ........... ........... ........... ........... ........... ........... ........... ...........
HFA Hardest-Hit Fund............ 7.60 0.10 ........... ........... ........... ........... ........... ........... ........... ........... ........... ...........
FHA Refinance................... 8.12 0.05 ........... ........... ........... ........... ........... ........... ........... ........... ........... ...........
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Housing Totals.......... 45.62 1.10 ........... ........... ........... ........... ........... ........... ........... ........... ........... ...........
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Grand Totals............ 474.76 410.45 238.63 4.18 4.44 161.75 16.23 1.45 9.59 8.48 35.74 274.38
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Mr. FRANK of Massachusetts. I yield myself 15 seconds to further
elucidate matters to the gentleman from Illinois. It has been disbursed
in a letter of credit, none of which has been drawn down. It sits there
as a reserve in case of losses.
I now yield 3 minutes to the gentlewoman from New York (Mrs.
Maloney).
Mrs. MALONEY. I thank the ranking member for yielding.
I rise in opposition to H.R. 830. This bill is one of four separate
anti-foreclosure programs aimed at helping troubled homeowners stay in
their homes that the new House Republican majority is planning to end.
What is very troubling is that they don't have any idea of what to put
in its place. We know that we have 12 million mortgages that are
underwater, that need help. They are in all of our States, but they are
not coming forward with any ideas of how to help the economy or how to
help the people.
Now, this particular program is just getting started. It is the FHA
Short Refinance Program, and it is one of the foreclosure prevention
programs that
[[Page H1684]]
would not only help the individual homeowners, but also help to
stabilize the overall U.S. housing market, which is 25 percent of our
economy. So it not only helps an individual. It helps a locality, it
helps our country, it helps our economic strength.
The result of ending this program would be hundreds of thousands of
additional foreclosures and steeper price declines in our housing. It
is outrageous. It is shortsighted. It is mean, and it is wrong.
Now, in this program it would allow the borrowers to reduce the
principal owed on their homes up to 10 percent so that their payments
are lower, so that they can save money that they can't afford. And in
return, the banks would get an FHA-insured loan that is subject to all
of FHA's strict standards. So to get this loan, you will have to jump
through hoops to be able to qualify.
And it is voluntary. Just last week, several major banks in America
voluntarily walked forward to help out--Citibank, Wells Fargo, and Bank
of America, to name a few. So the program is just getting started and
the $50 million line of credit is like a line of credit you draw down
on. Hopefully, we won't even have to tap into it. Hopefully, our
economy improves and people are able to pay their mortgages.
The standards are very strict. The owners must be current on their
payments. It must be their primary residence. They have to have full
documentation to qualify. So it is a strict program.
I want to come back to an issue that is very important to me and,
that is, this affects lives. This affects people.
In Congressman Frank's home State, there are over 222,000 residents
whose mortgages are underwater that could qualify possibly if they
could meet the criteria. It is part of a total package to help our
economy move forward, and the opposition, the Republican majority, has
no ideas of their own. It is just to come in and cut a good program
that is just getting started.
They mentioned the 44 people that have been helped. They say that is
not important. I would say it is very important to the 44 people who
have been helped, and there could be 12 million who could be helped
under this program.
Mr. BACHUS. I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from
North Carolina (Mr. Miller), one of the leading House experts on this
matter.
Mr. MILLER of North Carolina. Mr. Chairman, I want to reassure
Americans that it is not true that no problem ever gets fixed in
Washington. Ten years ago, the debate here in Congress was what to do
with the surplus. In fact, we paid off $400 billion of the debt; and
Alan Greenspan, who was then the chairman of the Federal Reserve Board,
worried that we would pay off the national debt too quickly and it
might be unsettling to the economy. Mr. Chairman, if there is one
problem that got solved in the past decade, it is that problem: the
problem of paying off the national debt too quickly.
My party can claim none of the credit for that. It was a Republican
President and a Republican Congress. I must admit that I don't like
what they did to solve that problem of paying off the national debt too
quickly. They gave tax cuts to America's top one-tenth of 1 percent,
Americans making more than $2,340,000, and we saw just a couple of
months ago that that was one thing that was absolutely nonnegotiable
for them. They would give up everything before they would let those
Americans have to pay any more in taxes.
When there was a proposal to expand Medicare to take care of
prescription drugs, something I supported generally, Republicans in
Congress passed a bill that was not paid for, as other programs like
that had been paid for, and was a giveaway to the insurance industry
and to the prescription drug industry. So when they are giving tax cuts
to the very, very richest Americans, the richest of the rich, when they
are giving away taxpayer money to the insurance companies and to the
prescription drug industry, the drug industry, they don't worry about
deficits at all. It is only when Democrats take the Presidency, and
particularly in the last 2 years when we have been dealing with the
worst recession since the Great Depression and have been trying to pull
the country out of a nosedive, that they have suddenly become worried
about the deficits and criticized everything that we have done to try
to save the country from the disaster that we inherited.
It is only the programs that help working and middle class families
that seem to give them a problem, like this one. Now, we have been on
the case of subprime lending and its effects for a long time. I
introduced legislation in 2004 to rein in subprime lending, not a bit
of help from Republicans. Mr. Watt and I introduced that bill. It was
Miller-Watt. Two years later, it became Miller-Watt-Frank. We have been
on this case.
The gentleman from Alabama said in committee the other day, Show me a
way to deal with this problem that doesn't cost taxpayer money. I did
that in 2007. I introduced a bill that bankruptcy lawyers and judges
have said was one way to deal with the problem, let bankruptcy judges
modify mortgages in bankruptcy the same way they modify all other kinds
of secured debt; no support from Republicans at all, and the opposition
Republicans killed that.
I urged the Federal agencies that set rules for the banks to require
they treat people better than they have been treating them when they
manage their mortgages, no help from Republicans at all. Just
yesterday, the Federal agencies in charge of the banks' conduct and the
States' attorneys general have been pushing them, the banks, to impose
fines for violating the law in how they handle foreclosures.
{time} 1320
Several Republicans sent a letter yesterday to the Secretary of the
Treasury protesting that Federal agencies were being too mean to the
banks.
I thought most politicians learned during the Keating Five that your
office does not give you the right to give your political buddies, your
contributors, a get-out-of-jail-free card, but that appears to be what
they're willing to do when it's the banking industry that is
complaining about it. It is not true that this problem of foreclosures
is just affecting a handful of Americans.
The CHAIR. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield the gentleman 1 additional
minute.
Mr. MILLER of North Carolina. We are in a cycle of foreclosures
leading to the reduced value of homes, more Americans underwater, and
when people are underwater, they've seen their life savings disappear.
More Americans underwater, more foreclosures, and on and on.
We have got to put a bottom on the housing market. We know this can
work. This program is very similar to a program in the New Deal that
did work, the Homeowners Loan Corporation. It turned a profit--a slight
profit, but a profit--saved the middle class, and saved the housing
industry. We need to do something. Republicans have offered nothing.
Mr. BACHUS. Mr. Chair, I yield 1\1/4\ minutes to the gentleman from
Nevada (Mr. Heck).
Mr. HECK. I thank the gentleman from Alabama for the time.
Mr. Chairman, I rise today to oppose H.R. 830, the FHA Refinance
Program Termination Act. I represent the district that is truly ground
zero for America's housing crisis; 390,192 mortgages in Nevada are
underwater. Let me say that again: 390,192 families in Nevada are
underwater.
I agree that people need a paycheck, not a government check, but we
must help individuals who are trying to do the right thing. This
program gives some of those Nevadans who are current on their mortgage
but underwater the ability to refinance their loan.
Some will say this program is a failure because too few mortgages
have been refinanced through it. They'll say not enough money has been
distributed. I say, a failed PR job should not be the reason a good
program dies. And the FHA Refinance Program can be a good program, but
it needs more attention, and perhaps reform, so homeowners know it's an
option.
Vote ``no'' on H.R. 830 and give homeowners a chance to take
advantage of this program.
Mr. BACHUS. Mr. Chair, I yield 1 minute to the gentleman from Kansas
(Mr. Yoder).
[[Page H1685]]
Mr. YODER. Thank you, Mr. Chairman.
I rise today in strong support of H.R. 830. The bill would repeal a
well-intentioned but bankrupt policy.
Mr. Chairman, the American people are tired of bailout after bailout
and big spending bill after big spending bill. With $14 trillion in
debt and borrowing $5 billion a day, yet unemployment is at 9 percent,
the American people are sending us an unmistakable message: The idea of
borrowing, bailing out and spending isn't working.
We're borrowing more money in Washington with this program that we
don't have to help Americans borrow more money at home that they can't
afford for housing they can't afford. Mr. Chairman, this is madness.
When will this stop and when will the politicians in Washington
understand that we're not going to be able to borrow and spend our way
to prosperity? The American people are tired of this. They want
Washington leaders to step up, reduce spending, and eliminate programs
that aren't working.
Mr. Chairman, I ask today that we pass this legislation and restore
fiscal sanity to Washington.
Mr. FRANK of Massachusetts. How much time is remaining on both sides,
Mr. Chairman?
The CHAIR. The gentleman from Massachusetts has 2\1/2\ minutes
remaining. The gentleman from Alabama has 4\1/4\ minutes remaining.
Mr. FRANK of Massachusetts. I have only one remaining speaker. I will
defer until the gentleman has his last speaker.
Mr. BACHUS. Mr. Chair, I yield 2\1/2\ minutes to the gentlelady from
Illinois (Mrs. Biggert).
Mrs. BIGGERT. I thank the gentleman for yielding.
Mr. Chairman, President Ronald Reagan famously said--with tongue in
cheek, no doubt--that the closest thing to eternal life on this Earth
is a Federal Government program.
I rise today in support of H.R. 830, legislation offered by my friend
from Illinois (Mr. Dold). At the risk of disproving the late
President's axiom, let me just say that H.R. 830 will demonstrate that
Congress does have the good sense, the fortitude, and the wherewithal
to bring an end to a Federal program, especially one that is not
working.
The program in question is the FHA Refinancing Program, which was
authorized under the broadest of provisions in the TARP legislation
back in 2008. In 2010, the program was conceived in haste, enacted with
no vote in Congress, and was designed to augment another failed
program, the Making Homes Affordable Program, or HAMP, which has done
more harm than good.
Under the FHA Refinancing Program, the FHA is directed to use TARP
funds to refinance mortgages that are current but underwater. Its
record has been abysmal, with the FHA Commissioner stating during our
hearing last month: ``As of February 11, 44 loans have been endorsed.''
Where else but in Washington would it be a good idea to obligate $8
billion in taxpayer funds and disburse $50 million of those dollars?
Now, whether it's to help 44 homeowners or not, we don't know how many
will be in default or what it will cost. But that money has been
disbursed from the U.S. Treasury.
Mr. Chairman, this bill ends another failed government program.
Taxpayers shouldn't foot the bill for failure. I would urge my
colleagues to support the bill.
Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself the balance
of my time.
A week ago when we debated this in committee, the author of the bill,
the gentleman from Illinois (Mr. Dold), was telling people that if they
joined this program they would have a tax liability. He was wrong. It
wasn't his fault. He was told that that was the case. He dutifully read
what he was told. You haven't heard that again because he found out
that was wrong.
He was also told that it was going to be $50 million disbursed. They
don't seem to be clear on what that means. No, $50 million has not been
spent on any individual. Fifty million has been set aside in a letter
of credit if necessary in the future to pay for defaults. So this
million dollars per loan is, of course, a fantasy.
Now, it is true, the program has not yet had a major impact. And if
it does not prove itself out, it never will. It cannot be both wildly
expensive and nonexistent. It is there. If we get an agreement
involving all the attorneys general of both parties, involving the
regulators and the financial institutions, this will be one of the
tools that will accommodate people. CBO does think there could be a
loss. Their prediction is, their best guess--and they're the best
objective element we have--you could get an amount of $12,000 or so per
loan lost here. Not a million dollars; 12,000. It is part of a panoply
of projects to try and reduce foreclosures and help the economy deal
with this crisis.
And for people who, and I repeat it--they don't like it--they'll send
money to Brazil, they'll send money to Afghan cities, they'll send
money to Iraqi security, they'll subsidize farmers at more than
$250,000 a year, but $12,000 per homeowner at most is too much for
them. And it isn't just for the homeowners; it is a necessary part of
getting out of our economic crisis.
So I hope that this is defeated. I appreciated what the gentleman
from Nevada said. Yes, it can be improved. The fact that only 44 people
have been involved so far means they are proceeding, appropriately,
cautiously. This is a program with great promise. It may not turn out,
but if a promise doesn't turn out, then it doesn't cost anything. And
if it does turn out to be a workable part of an overall solution, it
will be money much better spent than many of the billions my colleagues
on the other side are prepared to subsidize some of their favored
sacred cows as opposed to doing something that will help the whole
economy.
I yield back the balance of my time.
Mr. BACHUS. I yield myself the balance of my time.
Mr. Chair, Members of this body, what are we talking about when we're
talking about cutting government spending? We're talking about these
children.
{time} 1330
These children cannot afford a future where its Federal Government
spends $8 billion more every day than it takes in.
Now, the ranking member has criticized our military spending. I could
have a picture of my grandchildren up, and I could have a picture of
one of my little granddaughters whose dad served in the U.S. Marines.
Their unit served in Afghanistan and in Iraq. So I make no apology for
supporting our troops. Now if the President decides to call them home,
my son would support that.
Now, Ranking Member Frank said this sits in a fund. This program that
has helped 44 families whose average mortgage was $330,000--that's more
than the cost of a home in my district. But here is President Obama's
report to us that $50 million has been disbursed, but the alarming
figure is $8.12 billion that's obligated.
The gentlelady from New York said that the banks--Citibank, Bank of
America--they're all lining up to use this program. I would be too.
This transfers obligations from lenders to the taxpayer. As long as
these mortgages were making money, the banks profited. But all of a
sudden when they're underwater and a borrower maybe can't make the
payment, hey, if I was a bank, I would say, yeah, let the government,
let the taxpayers reduce this mortgage. That ought to be between the
bank and the homeowners.
Forty-two families? You say all these four programs we're going to
debate this week and next week--which cost billions of dollars--they're
going to help half a million families? There are 12 million families
that are underwater.
Let's talk about something very important. If we don't get our
financial house in order, I'll quote the words of Admiral Mike Mullen
on August 25 before CNN, and I will close with this, ``The most
significant threat to our national security is our debt.'' And that
threat comes from this body and the administration. It's time to cut
spending. Think about them. Think about their future.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Chair, I rise in opposition
to H.R. 830, the FHA Refinance Program Termination Act.
This legislation would end the FHA's short-term refinance program
authorized under the Troubled Asset Relief Program.
[[Page H1686]]
A program designed to help homeowners refinance their existing
mortgage for lower interest rates.
With declining home values, borrowers are caught in mortgages that
they can no longer afford.
This is because their rates have reset or because their interest-only
payments have not allowed them to grow any equity in their homes.
They are making their payments--but just barely.
Mr. Chair, we should continue to help hard working Americans who are
paying their bills on time every month stay in their homes.
Ending this vital recovery program with no alternative plan is just
wrong.
The Republicans reckless spending proposals will move our country
backwards not only domestically but globally.
Eliminating this program will cost us more in the long-term.
While I believe cuts are necessary to address the Nation's long-term
fiscal problems, it must be done responsibly and with the American
public's interest in mind.
I encourage my colleagues to oppose this bill.
Mr. DINGELL. Mr. Chair, I rise in opposition to H.R. 830, a hasty
political ploy that will terminate a promising program. I refuse to let
my Republican colleagues, determined to appear fiscally austere at any
cost, cut budding initiatives that are in the best interest of the
country.
The FHA Refinance Program is tailored to benefit responsible
homeowners--homeowners who, through principal write-downs, will be able
to stay in their homes. It is also structured to protect lenders from
possible foreclosure losses and save communities from increased blight.
Ten states, including my home state of Michigan, posted foreclosure
discounts of more than 35 percent in 2010. We must use all our tools at
hand to stem this massive foreclosure epidemic.
I hear daily from struggling homeowners who are trying to keep
afloat. Negative equity mortgages are plaguing our country from coast
to coast. At the end of last year, 11.1 million, or 23.1 percent, of
all residential mortgages were in negative equity. In Michigan, over 36
percent of mortgages were in negative equity. Home prices are expected
to fall another five to ten percent in 2011. Millions of borrowers are
being held captive in their homes, unable to move or sell their
properties. Keeping programs like the FHA Refinance Program alive is
crucial to spurring economic recovery and giving the mortgage industry
the jump-start it so desperately needs.
My Republican colleagues like to point to the fact that since the
program has only spent $50 million, it must be ineffective. I find it
interesting that a Republican argument against a program is that it
hasn't cost the government enough. So much for fiscal austerity. In
fact, the FHA Refinance Program was specifically designed to be cost-
effective for the government. Its allocated funds only cover
incremental credit and incentive costs, and will not be spent unless a
borrower defaults under the program. Since no borrowers have defaulted,
no money has been spent on loans.
Let us not forget how hasty this bill is--the FHA Refinance Program
has only been available since September. It is no surprise that it
takes time for such complex programs to work effectively and prudently.
Lenders must set up an operational infrastructure to utilize this
option, and a great deal of coordination is required throughout the
mortgage chain. As of February 11th, 23 FHA-approved lenders are
participating in the program, including Wells Fargo and GMAC/Ally,
which intend to deliver several thousand loans. FHA also indicates that
numerous other lenders are in the process of developing the capability
to utilize the program by midyear.
Not only does the Republican Leadership seek to terminate the FHA
Refinance Program, but it also seeks to terminate the Home Affordable
Modification Program, the Neighborhood Stabilization Program, and the
Emergency Homeowners Loan Program. It is clear that more needs to be
done to help struggling homeowners stay in their homes. However,
terminating the very programs that were established to do so is not the
solution. I encourage my colleagues on the other side of the aisle to
come to the table and present real solutions to this epidemic. If a
Member feels this program has not benefited enough homeowners, he or
she should suggest a way to do so and we can go from there. Instead,
Republicans are placing politics before people. Our Nation needs
solutions, not denunciations.
Mr. Chair, I strongly urge my colleagues to vote against this bill.
Mr. VAN HOLLEN. Mr. Chair, the FHA Refinance Program proposed for
termination in today's legislation is designed to provide distressed
homeowners mortgage relief by using FHA loan guarantee authority to
incentivize holders of existing single family loans to reduce the
outstanding principal balance of their loans by at least 10% in
conjunction with an FHA refinance when the principal balance of a
borrower's loan is greater than the property's current value.
Importantly, participating homeowners must be current on their existing
loan, and all other FHA safety and soundness underwriting standards
continue to apply. Any losses under the program are covered by funds
already set aside by the TARP, adding no additional exposure to the
FHA's capital reserves.
Mr. Chair, while I am aware of--and frankly, to some extent
sympathetic to--the criticism and frustration around the pace and scope
of this program to date, I would also point out that it has only been
operational since October of last year. Furthermore, as a purely
voluntary program, its success clearly hinges on the active
participation of our major loan servicers, two of whom--Wells Fargo and
Ally Financial--have just recently announced their intention to let
qualified borrowers take advantage of the program. Finally, with an
estimated one in five homeowners currently underwater on their
mortgages, it is clear to me that the housing crisis is not yet behind
us.
By providing struggling but credit-worthy homeowners with a reduced
monthly payment and a mortgage that is more aligned with actual
property values, the FHA Refinance Program can help prevent
foreclosures and stabilize the housing market, which is in every
American's long term interest.
The CHAIR. All time for general debate has expired.
Pursuant to the rule, the amendment in the nature of a substitute
printed in the bill shall be considered as an original bill for the
purpose of amendment under the 5-minute rule.
No amendment to the committee amendment in the nature of a substitute
is in order except those received for printing in the portion of the
Congressional Record designated for that purpose in a daily issue dated
March 9, 2011, or earlier and except pro forma amendments for the
purpose of debate. Each amendment so received may be offered only by
the Member who causes it to be printed or a designee and shall be
considered read if printed.
The Clerk will designate section 1.
The text of section 1 is as follows:
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 ``FHA Refinance Program
Termination Act''.
Amendment No. 9 Offered by Mrs. Maloney
Mrs. MALONEY. Mr. Chairman, I have an amendment at the desk.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
After section 1, insert the following new section:
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) there are 35,610 underwater mortgages in Alabama;
(2) 7,801 underwater mortgages in Alaska;
(3) 648,387 underwater mortgages in Arizona;
(4) 27,580 underwater mortgages in Arkansas;
(5) 2,172,700 mortgages in California;
(6) 221,097 underwater mortgages in Colorado;
(7) 97,244 underwater mortgages in Connecticut;
(8) 23,906 underwater mortgages in Delaware;
(9) 2,029,128 underwater mortgages in Florida;
(10) 449,971 underwater mortgages in Georgia;
(11) 24,664 underwater mortgages in Hawaii;
(12) 61,566 underwater mortgages in Idaho;
(13) 431,050 underwater mortgages in Illinois;
(14) 68,196 underwater mortgages in Indiana;
(15) 28,976 underwater mortgages in Iowa;
(16) 32,787 underwater mortgages in Kansas;
(17) 24,880 underwater mortgages in Kentucky;
(18) 298,554 underwater mortgages in Maryland;
(19) 222,599 underwater mortgages in Massachusetts;
(20) 519,716 underwater mortgages in Michigan;
(21) 90,090 underwater mortgages in Minnesota;
(22) 122,543 underwater mortgages in Missouri;
(23) 8,650 underwater mortgages in Montana;
(24) 21,388 underwater mortgages in Nebraska;
(25) 390,192 underwater mortgages in Nevada;
(26) 37,488 underwater mortgages in New Hampshire;
(27) 286,293 underwater mortgages in New Jersey;
(28) 29,375 underwater mortgages in New Mexico;
(29) 129,633 underwater mortgages in New York;
(30) 160,007 underwater mortgages in North Carolina;
[[Page H1687]]
(31) 3,582 underwater mortgages in North Dakota;
(32) 441,379 underwater mortgages in Ohio;
(33) 24,411 underwater mortgages in Oklahoma;
(34) 108,335 underwater mortgages in Oregon;
(35) 132,805 underwater mortgages in Pennsylvania;
(36) 45,511 underwater mortgages in Rhode Island;
(37) 85,226 underwater mortgages in South Carolina;
(38) 133,956 underwater mortgages in Tennessee;
(39) 367,954 underwater mortgages in Texas;
(40) 98,093 underwater mortgages in Utah;
(41) 276,910 underwater mortgages in Virginia;
(42) 209,577 underwater mortgages in Washington;
(43) 15,240 underwater mortgages in Washington D.C.;
(44) and 81,267 underwater mortgages in Wisconsin.
(45) the aggregate number of mortgages estimated to be
underwater in such States is 10,780,236; and
(46) by voting to terminate the FHA Refinance Program under
this Act without a suggested replacement, the Congress is
voting to terminate a program that may have helped these
underwater borrowers.
Mr. BACHUS. Mr. Chairman, I reserve a point of order against the
amendment.
The CHAIR. A point of order is reserved.
The gentlewoman from New York is recognized for 5 minutes in support
of her amendment.
Mrs. MALONEY. Mr. Chairman, my amendment has the purpose of making
very clear what we're doing today to the American people. This
amendment makes clear that we are ending a program that has the
potential to help hundreds of thousands of underwater borrowers.
H.R. 830, the FHA Refinance Program Termination Act, ignores the
underwater borrowers of this country and does nothing to help families
save their homes.
Very simply, the bill ends a program that has the potential to help
hundreds of thousands of people whose mortgages now exceed the value of
their home, and also help the communities and help the overall economy.
The majority crafted a so-called ``open rule'' in such a way that
it's nearly impossible to offer any substantive amendments--a number
were voted down on a party line in the committee debates--in response
to this reality.
In an effort to highlight the true nature of this harmful bill, my
amendment identifies the numbers in each State of the hundreds of
thousands of underwater borrowers across the country and makes clear
that the Republican majority has no solution to the problem, nor do
they have any desire to find one.
Americans must be made aware of the intention of this majority. This
program allows borrowers to write down at least 10 percent to reduce
the debt burden. They are all paying. They are in financial difficulty.
Banks then can get an insured FHA guarantee and move forward and people
can keep living in their homes and can keep participating in the
economy.
Because of this vote today, if the majority wins, homeowners across
the country may not have the opportunity to take advantage of the
program that has just begun, and which should be made, in my opinion,
available to them.
Now what this does, it goes down all of the impacts across the
country. It shows that in my home State of New York there are over
129,000 mortgages underwater that would not be able to apply for this
program to allow people to stay in their homes. In Chairman Bachus'
State, there are over 35,000 mortgages underwater. In Florida, there
are more than 2 million mortgages underwater, and they have no
alternative of any way to help these people. And these numbers are from
an independent company's study.
If you go to California, our largest State, over 2 million homes are
underwater. Nevada, 390,000 individuals are facing the loss of their
homes. In Arizona, there are over 648,000 families that are underwater.
Their home is not worth what they're paying for it, what the mortgage
is.
So this program is one that I think is thoughtful, one that has only
$50 million as sort of a line of credit that will be pulled down if
there are defaults. But the banks participating have very strict
standards, as does the FHA. It has to be their primary residence. They
have to provide full documentation. No more of these ``no doc'' loans.
They must be current on the mortgage. They must have a job. They have
to have many, many levels that they have to meet before they get the
loan. But at least it's a lifeline to these 12 million families whose
homes are underwater.
With declining home values, borrowers are caught in mortgages they no
longer can afford because their rates have reset or because their
interest-only payments have not allowed them to grow any equity in
their homes. They are making their payments, but just barely. And so
this one is there to help them. And it simply adds findings to the bill
with the number of underwater mortgages in each State that we've
secured the data for so that it becomes very clear to the American
people how many homeowners in each State we are not helping if we do
what the majority wants, to terminate this program.
And I might say this program is one of four that the Obama
administration has put forward to help homeowners stay in their homes
and to help stabilize our economy, which is still fragile and is still
recovering. Housing is 25 percent of our economy, according to many
economists. So the strength of housing is important to the overall
health of our Nation's economic future.
So I urge my colleagues to support the amendment, to make it clear by
the vote on this bill how many Americans across this country will not
be helped if the majority gets their passage of their bill that would
terminate a program that has the potential of helping literally
millions in America.
I urge a ``yes'' vote on my amendment.
{time} 1340
Point of Order
Mr. BACHUS. Mr. Chairman, I make a point of order against the
amendment because in my opinion it violates clause 7 of rule XVI which
requires that an amendment be germane to the matter it's amending.
It's not germane to the bill because it's outside the scope of the
bill and fails to draw the nexus to the bill.
The CHAIR. Does any other Member wish to be heard on the point of
order?
The Chair recognizes the gentlewoman from New York.
Mrs. MALONEY. The amendment is germane, Mr. Chairman.
This program has the potential to help underwater mortgages across
our great country, which is germane to the bill we're debating today,
because the bill terminates the potential of this help. You have no
findings in this bill that you're rushing to the floor.
It is germane to talk about the hundreds of thousands of homeowners
that are out there that possibly could lose their home because this
program is being terminated. This is germane, in my opinion, to the
underlying bill.
The CHAIR. Does any other Member wish to be heard on the point of
order?
The Chair recognizes the gentleman from Alabama.
Mr. BACHUS. Mr. Chair, she lists the number of mortgages that are
underwater and says that this program may help them. Obviously, there
are many of those, the buyers are behind on their payments and they
wouldn't qualify for help. Just the number 44 ought to tell you that
when you list 12 million homeowners and then say that the termination
of this program would have helped is quite a stretch. There are certain
other qualifications under this legislation that are not met by simply
being underwater.
The CHAIR. Does the gentlewoman from New York wish to be heard on the
point of order?
Mrs. MALONEY. Yes, I do.
As a point of information, there are very strict criteria from the
FHA and from the individual banks that are voluntarily participating,
and one of those criteria is that you must be current on your payments.
You must be current. What the gentleman said was inaccurate, that they
could be behind on their payments or not making their payments. They're
having difficulty making it because their home value is not equal to
what the mortgage is. And so it's difficult. But they must all be
current on their payments.
The CHAIR. The gentlewoman needs to confine her remarks to the point
of order.
[[Page H1688]]
Ms. JACKSON LEE of Texas. Mr. Chairman, I would like to be heard on
the point of order.
The CHAIR. The Chair recognizes the gentlewoman from Texas.
Ms. JACKSON LEE of Texas. First of all, the gentleman from Alabama
was arguing the merits of the legislation. These are findings that
pertain to the results that would occur from the language in the bill.
The bill is eliminating the existing funds or leftover funds for FHA
refinance. The amendment clearly lays out the impacted persons
connected to the elimination. Therefore, this is germane because it
relates to the language of the amendment and the intent of the
amendment.
Twelve million people left behind, thousands of homeowners in
different States, and the fact that there is no other solution to these
homeowners except FHA refinance, it is a germane amendment. The
findings are simply laying out the impact. We do that in all of our
bills to put findings on what the impact of legislation would be.
I ask the Chairman to consider the gentlelady's amendment being
germane. The findings are germane, and it is doing simply that of
listing the elements of the impact of this legislation.
I ask for a waiver of the point of order.
The CHAIR. The Chair is prepared to rule on the point of order.
The gentleman from Alabama makes a point of order that the amendment
offered by the gentlewoman from New York is not germane.
The bill addresses repeal of a Federal Housing Administration program
that provides for refinancing of a specified set of mortgages.
One of the fundamental principles of germaneness is that the
amendment must relate to the subject matter of the underlying bill. The
bill is confined to a specific type of refinancing program. The
amendment seeks, in part, to address mortgages on broader bases, beyond
the ambit of the bill.
The amendment is therefore not germane. The point of order is
sustained.
Mrs. MALONEY. I move to strike the last word.
The CHAIR. The gentlewoman from New York is recognized for 5 minutes.
Mrs. MALONEY. I'm distressed with this ruling because I think it is
germane that people will lose their homes, that they are eliminating a
program that is just starting that is thoughtful, that would give FHA
financing and guarantees to help people stay in their homes, and that
people in Nevada, over 390,000, could be affected by this; California,
over 2 million people's homes are underwater; in Florida, over 2
million homes are underwater; Arizona, 648.
And in my own State, over 129,000 people will not have the access to
this program that allows them to adjust their mortgages so that they
reflect the true value of their homes, make their payments on that
value so that they can move forward and be part of the community, keep
these homes from becoming blight and emptied in an area.
We all have stories in our districts and across the Nation where
people cannot make their mortgage payments because they have lost
values in their home. They are deserting them. They are leaving them.
In some States, they are literally bulldozing the homes underground
because no one can afford to live in them. This is an answer to some of
the challenges.
And my colleagues on the other side of the aisle talk about the cost.
Well, I would say that the cost--not only to the individual homeowner,
but to the overall economy--will be greater by terminating the four
efforts, the four antiforeclosure efforts from the Obama administration
to help with the housing crisis.
And we know that the subprime crisis was a scandal. Many people were
not--got into homes they couldn't afford under misinformation.
We have helped other areas of our economy. We certainly should help
the homeowners, the working Americans to help them through this
economic crisis, too.
And we have to remember that although we are digging our way out of
this Great Recession, the recovery has been slow. We are still in a
fragile recovery. The economists testified before the Financial
Services Committee that housing was 25 percent of our economy.
So, helping people stay in their homes, I would say that our overall
economy has a stake in it.
Now, some people said, well, the banks will run in and do this. Banks
are not going to do this unless they think that the loan is going to be
paid and they're not going to be hurt with it. And the standards from
FHA are very high. You have to be current. You have to have a job. You
have to live in your home. You have to have a proven track record. You
have to have good credit before you can be approved. So that is why
only 50 million is the line of credit that will be drawn down if there
are foreclosures.
Hopefully the economy improves, people keep their jobs. Hopefully the
banks do a good job and do not hand out loans unless people can
actually repay them. And this will be a tool to move forward not only
to help people, but to help the overall economy.
Now, what I find very troubling about this is that my friends on the
other side of the aisle want to terminate four antiforeclosure
programs, but they have no alternative. It's sort of like their
approach to jobs. They have not come forward with any program to help
create jobs. They have not come forward with any program to help people
stay in their homes. It's part of the ``so be it'' attitude. You're on
your own. We're not going to help you.
But this is a program that helps people help themselves adjust to the
reality of what their homes are actually worth. And I think that it's
important that this information of how many people, the 12 million
people and where they live in America, is important information that
should be part of this bill.
And that's why I am now respectfully requesting unanimous consent to
place into the Record the listing of where these 12 million people live
so people will know these are the people we are saying ``no,'' ``so be
it,'' ``we're not going to be there to help you.''
And let me tell you, my follow colleagues. I would be cautious about
voting for this, because you're voting against your economy. You're
voting against your State. You are voting against your own colleagues,
your own residents and neighbors who may need this. We know the trouble
that's in this economy. Practically every family in America has some
relative who's lost a job or is unemployed. So this is some way to help
with this economic recovery. It is thoughtful. It is a good program.
And I urge my colleagues to vote against the ``so be it'' bill the
Republicans have before us today and to really work with, in a
bipartisan way, the Obama administration to help working Americans,
struggling Americans stay in their home.
{time} 1350
It's the least that we can do as a caring Nation, absolutely the
least we can do as a caring Nation. So I urge my colleagues, and I
would be very cautious in your vote, because I believe your
constituents are going to remember this vote if this program is
terminated and their lifeline, their ability to stay in their homes, is
terminated because of your vote today.
TABLE 1: NEGATIVE EQUITY BY STATE*
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Properties With a Mortgage Outstanding $ Outstanding
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Negative Equity Near** Negative Negative Equity Near** Negative Mortgage Debt Loan-to-
State Mortgages Mortgages Equity Mortgages Share Equity Share Total Property Value Outstanding Net Homeowner Equity Value Ratio
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama..................................................... 340,665 35,610 19,188 10.5% 5.6% 65,482,055,550 43,970,078,384 21,511,977,166 67%
Alaska...................................................... 87,286 7,801 5,160 8.9 5.9 23,773,756,773 15,920,518,570 7,853,238,203 67
Arizona..................................................... 1,333,398 648,387 63,304 48.6 4.7 263,693,025,194 243,760,655,061 19,932,370,133 92
Arkansas.................................................... 238,011 27,580 14,360 11.6 6.0 37,303,484,103 27,450,225,612 9,853,258,491 74
California.................................................. 6,870,914 2,172,700 299,067 31.6 4.4 2,864,273,476,858 2,008,766,937,342 855,506,539,516 70
Colorado.................................................... 1,125,434 221,097 91,187 19.6 8.1 301,289,945,528 217,120,459,818 84,169,485,710 72
[[Page H1689]]
Connecticut................................................. 816,560 97,244 29,957 11.9 3.7 294,814,146,661 171,517,175,208 123,296,971,453 58
Delaware.................................................... 179,322 23,906 8,937 13.3 5.0 47,059,588,802 31,949,546,484 15,110,042,318 68
Florida..................................................... 4,459,951 2,029,128 182,323 45.5 4.1 853,646,775,841 757,212,788,734 96,433,987,107 89
Georgia..................................................... 1,605,825 449,971 120,854 28.0 7.5 319,934,838,691 255,319,644,351 64,615,194,340 80
Hawaii...................................................... 229,600 24,664 8,280 10.7 3.6 117,791,198,842 65,339,432,694 52,451,766,148 55
Idaho....................................................... 243,589 61,566 12,927 25.3 5.3 48,204,517,879 35,737,930,659 12,466,587,220 74
Illinois.................................................... 2,227,602 431,050 108,239 19.4 4.9 534,999,520,161 377,625,407,977 157,374,112,184 71
Indiana..................................................... 603,484 68,196 28,936 11.3 4.8 91,672,823,585 64,195,877,062 27,476,946,523 70
Iowa........................................................ 334,689 28,976 14,366 8.7 4.3 51,019,867,858 34,150,823,254 16,869,044,604 67
Kansas...................................................... 295,839 32,787 16,284 11.1 5.5 53,431,665,604 37,737,206,158 15,694,459,446 71
Kentucky.................................................... 279,187 24,880 14,092 8.9 5.0 47,549,597,328 32,335,774,221 15,213,823,107 68
Louisiana................................................... NA NA NA NA NA NA NA NA NA
Maine....................................................... NA NA NA NA NA NA NA NA NA
Maryland.................................................... 1,358,672 298,554 67,580 22.0 5.0 433,409,001,574 298,109,259,531 135,299,742,043 69
Massachusetts............................................... 1,494,099 222,599 51,704 14.9 3.5 546,053,917,907 329,062,834,394 216,991,083,513 60
Michigan.................................................... 1,381,232 519,716 76,403 37.6 5.5 198,169,103,537 169,373,043,369 28,796,060,168 85
Minnesota................................................... 554,535 90,090 27,608 16.2 5.0 124,901,317,584 81,787,965,185 43,113,352,399 65
Mississippi................................................. NA NA NA NA NA NA NA NA NA
Missouri.................................................... 779,328 122,543 44,131 15.7 5.7 137,735,363,892 98,445,466,785 39,289,897,107 71
Montana..................................................... 112,444 8,650 3,939 7.7 3.5 28,244,797,730 16,968,913,610 11,275,884,120 60
Nebraska.................................................... 221,686 21,388 13,072 9.6 5.9 35,462,342,354 25,920,022,837 9,542,319,517 73
Nevada...................................................... 586,515 390,192 23,037 66.5 3.9 103,720,996,430 123,072,698,809 -19,351,702,379 119
New Hampshire............................................... 211,489 37,488 11,351 17.7 5.4 51,974,243,397 35,837,313,271 16,136,930,126 69
New Jersey.................................................. 1,882,603 286,293 78,230 15.2 4.2 678,172,085,088 415,710,918,011 262,461,167,077 61
New Mexico.................................................. 234,004 29,375 10,847 12.6 4.6 55,009,963,072 36,551,762,344 18,458,200,728 66
New York.................................................... 1,838,917 129,633 40,013 7.0 2.2 835,125,621,032 415,765,632,474 419,359,988,558 50
North Carolina.............................................. 1,521,406 160,007 101,945 10.5 6.7 317,535,658,347 223,145,876,102 94,389,782,245 70
North Dakota................................................ 48,415 3,582 1,478 7.4 3.1 8,291,290,055 4,967,349,459 3,323,940,596 60
Ohio........................................................ 2,204,754 441,379 137,601 20.0 6.2 324,006,229,515 242,010,058,915 81,996,170,600 75
Oklahoma.................................................... 408,155 24,411 14,962 6.0 3.7 60,039,397,170 42,451,471,333 17,587,925,837 71
Oregon...................................................... 693,304 108,335 38,849 15.6 5.6 179,130,635,748 122,988,902,147 56,141,733,601 69
Pennsylvania................................................ 1,794,563 132,805 58,312 7.4 3.2 401,020,775,572 248,939,681,403 152,081,094,169 62
Rhode Island................................................ 227,897 45,511 8,120 20.0 3.6 64,414,910,589 39,693,719,643 24,721,190,946 62
South Carolina.............................................. 598,223 85,226 37,091 14.2 6.2 131,254,482,178 92,349,858,129 38,904,624,049 70
South Dakota................................................ NA NA NA NA NA NA NA NA NA
Tennessee................................................... 962,894 133,956 67,386 13.9 7.0 166,572,683,790 118,119,771,078 48,452,912,712 71
Texas....................................................... 3,286,505 367,954 194,944 11.2 5.9 602,239,776,419 418,772,404,728 183,467,371,691 70
Utah........................................................ 472,867 98,093 30,339 20.7 6.4 114,775,697,922 84,499,611,037 30,276,086,885 74
Vermont..................................................... NA NA NA NA NA NA NA NA NA
Virginia.................................................... 1,252,705 276,910 73,763 22.1 5.9 419,006,811,369 295,429,338,477 123,577,472,892 71
Washington.................................................. 1,407,416 209,577 75,920 14.9 5.4 441,789,933,181 292,406,352,738 149,383,580,443 66
Washington, DC.............................................. 100,340 15,240 4,513 15.2 4.5 49,085,895,573 28,782,522,751 20,303,372,822 59
West Virginia............................................... NA NA NA NA NA NA NA NA NA
Wisconsin................................................... 619,792 81,267 30,026 13.1 4.8 120,246,415,775 80,769,544,053 39,476,871,722 67
Wyoming..................................................... NA NA NA NA NA NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Nation.................................................. 47,871,838 10,780,236 2,376,159 22.5 5.0 12,711,358,863,378 8,850,515,659,256 3,860,843,204,122 70
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* This data only includes properties with a mortgage. Non-mortgaged properties are by definition not included.
** Defined as properties within 5% of being in a negative equity position.
Source: CoreLogic. The data provided is for use only by the primary recipient or the primary recipient's publication. This data may not be re-sold, republished or licensed to any other source, including publications and sources
owned by the primary recipient's parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a real estate
data and analytics company. For questions, analysis or interpretation of the data contact Lori Guyton at [email protected] or Bill Campbell at [email protected]. Data provided may not be modified without the prior written
permission of CoreLogic. Do not use the data in any unlawful manner. This data is compiled from public records, contributory databases and proprietary analytics, and its accuracy is dependent upon these sources.
Ms. JACKSON LEE of Texas. Mr. Chairman, I move to strike the last
word.
The CHAIR. The gentlewoman from Texas is recognized for 5 minutes.
Ms. JACKSON LEE of Texas. I am very sorry that Congresswoman
Maloney's amendment was subject to a point of order. I would like to
simply add that you need to put faces on what this legislation is
doing. It is a simple act. It guts and eliminates all remaining
funding. It does say that if you are in the midst of the program you
might continue.
But everyone knows how solid FHA is. Whenever you hear FHA, you know
that there is a framework that really provides for protection for the
Federal Government and a fiscally responsible program that provides the
Federal Government with protection for those who are able to utilize
it.
But even traveling through airports, Mr. Chairman, I had a man with a
family who indicated that in the midst of the holiday season, even
though he had been told by the banking institution that his mortgage
was intact, they would allow him to continue to pay, he was keeping up
but having difficulty looking for modification, a few days into the new
year, January 6, he was foreclosed on, and a few days later, or at
least on that day foreclosed with a sign or a notice on his door,
``Vacate in 3 days.'' These are the faces of individuals who probably
would have fared better under FHA.
At the same time, a law enforcement, a police officer came to me and
said the very same thing, naming an institution that I had never heard
of, had no national standing, some fly-by-night. Here is a law
enforcement officer, a local police officer putting his life on the
line every day, and he needed to sell his home. He had managed to find
a buyer. He had communicated that to the bank. But lo and behold, the
lowlife thing to do was what this financial institution did. And I
would call it not a bank, but probably a mortgage entity. They took the
house right from underneath a man that goes out every day and projects
himself into the community and could lay his life on the line.
I am against H.R. 830 and H.R. 836. It doesn't make sense when we've
got hundreds of thousands of individuals who are in need of this
program. I will venture to say that if a program needs fixing, have we
ever heard of fix it, don't end it? Mend it, don't end it? Of course it
is always important to do due diligence and have oversight over these
programs. But I would think that the Financial Services Committee,
under our past chairman and now the ranking member, working with the
chairman now, could come up with the genius to make FHA work better if
that is the case.
But the nonsensical plan of eliminating it, not helping the
underwater mortgagees, the individuals who have these mortgages, with
homes that are distressed, with mortgages that are worth more than the
homes--we know there are many communities like this, and my colleague
mentioned some, but let me cite three States again because it's so
enormous, and we have heard so much from them: Florida, 2 million;
California, 2 million; Nevada, 390,000. They are still in distress.
Everyone knows that the housing market has a lot to do with this
economy. And even without the help of my good friends on the other side
of the aisle, we still saw the unemployment go down and 192,000 jobs
created. But I can tell you that this does nothing to create jobs. It
simply puts Americans out on the street. It devastates families. And
who knows, with the lack of sales of homes and remodification or
modification of these, it puts people out of work, not in work.
So I argue vigorously, a little too late on the gentlelady's
amendment, but I want to thank her for her astuteness, carefully
defining what impact this bill would have. And it's unfortunate that
the good work of FHA that requires documentation, a current job, a
decent salary, all that is needed is
[[Page H1690]]
now thrown to the wolves with no other plan. So we go home, and
constituents will ask us about modification or the viability of FHA,
which has been in place for a long period of time. All we have to do is
give them our empty hands and our blank face, saying obviously greater
minds than you, who knew this was a good program, decided to eliminate
it with no substitute in place.
So Mr. Chairman, let me conclude by simply saying to the hundreds of
thousands of borrowers, have faith, because this is only the first
step. We know this is wrongheaded, the wrong direction. Thank goodness
for the Founding Fathers that gave us the House and the Senate and a
President. I can be assured that this legislation, I hope, is destined
for a route of no return.
Announcement by the Chair
The CHAIR. The Chair would remind the gentlewoman to direct her
comments to the Chair, and not the viewing public.
The Clerk will designate section 2.
The text of section 2 is as follows:
SEC. 2. RESCISSION OF FUNDING FOR FHA REFINANCE PROGRAM.
Effective on the date of the enactment of this Act, there
are rescinded and permanently canceled all unexpended
balances remaining available as of such date of enactment of
the amounts made available under title I of the Emergency
Economic Stabilization Act (Public Law 110-343; 12 U.S.C.
5211 et seq.) that have been allocated for use under the FHA
Refinance Program (pursuant to Mortgagee Letter 2010-23 of
the Secretary of Housing and Urban Development) of the Making
Home Affordable initiative of the Secretary of the Treasury.
Amendment No. 11 Offered by Mr. Fitzpatrick
Mr. FITZPATRICK. Mr. Chairman, I have an amendment at the desk made
in order under the rule.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 5, line 12, after the period insert the following:
``All such unexpended balances so rescinded and permanently
canceled shall be retained in the General Fund of the
Treasury for reducing the debt of the Federal Government.''.
The CHAIR. The gentleman from Pennsylvania is recognized for 5
minutes in support of his amendment.
Mr. FITZPATRICK. Mr. Chairman, I want to thank my colleague from
Illinois (Mr. Dold) for introducing this legislation to end a failed
Federal program, the FHA Refinance Program. This amendment ensures that
the savings realized from ending this program go directly to debt
reduction.
Last month, Mr. Chairman, this Chamber began a process of examining
the Federal budget line by line, asking tough questions and making
tough decisions on Federal spending. While our work was substantial, it
is also continuing. In order to encourage economic growth and job
creation, the Federal debt is and must remain public enemy number one.
Over the past 2 years, Federal discretionary spending has increased by
24 percent. The rate of growth is simply unsustainable.
Despite the record pace of new spending over the last 2 years, that
spending continues today. Just this week, Mr. Chairman, we learned that
the Federal deficit for the month of February 2011 was the highest
ever, and exceeded the deficit for the entire fiscal year 2007, $233
billion, Mr. Chairman, the biggest monthly deficit in the history of
our country.
Over the past decade, we have seen the excesses and unsustainable
growth in sectors of our economy that can have disastrous effects
across the entire economy. Unless we take dramatic action now, the tax
burden placed on small businesses and families in my own Bucks County
and across the Nation will outpace our ability to pay, killing jobs and
straining family budgets.
Just as troubling is the fact that the money our government is using
to feed today's spending is being borrowed from future generations,
much of it borrowed from foreign Nations. The sheer amount of cash owed
to foreign powers led the chairman of the Joint Chiefs of Staff,
Admiral Michael Mullen, last year to declare the deficit as the number
one security threat facing our Nation. Reduce the debt.
I ask my colleagues to support the amendment, support the underlying
bill.
I yield back the balance of my time.
Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last
word.
The CHAIR. The gentleman from Massachusetts is recognized for 5
minutes.
Mr. FRANK of Massachusetts. First, I would repeat that I am glad to
hear the support for Admiral Mullen--earlier we heard of Secretary
Gates--in their warning about the deficit. I just wish that all of
those who were accepting their warning on the deficit would refrain
from forcing money on them that they don't want. We have people citing
the military leadership and then voting for weapons systems, swelling
an already swollen military budget, that they don't want.
As to this amendment, I am tempted to come to the defense of the
drafters of the bill, because if you read the bill, the bill purports
to do what the amendment purports to do. Apparently the author of the
amendment didn't think the bill did a good enough job, or somebody
thought the author of the amendment, being a nice fellow, ought to get
in on the credit. So this is an amendment that is either editorial
refinement or political redundancy. In either case, it does not have
much effect; so I urge the Members to adopt it.
Mrs. MALONEY. Madam Chairman, I move to strike the last word.
The Acting CHAIR (Mrs. Miller of Michigan). The gentlewoman from New
York is recognized for 5 minutes.
Mrs. MALONEY. I would just like to point out to Congressman
Fitzpatrick from the great State of Pennsylvania that there are over
132,000 homes that are underwater now that could benefit from this
program, and urge my colleagues to support the program.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Pennsylvania (Mr. Fitzpatrick).
The amendment was agreed to.
{time} 1400
The Acting CHAIR. The Clerk will designate section 3.
The text of section 3 is as follows:
SEC. 3. TERMINATION OF FHA REFINANCE PROGRAM.
(a) Termination of Mortgagee Letter.--The Mortgagee Letter
referred to in section 2 shall be void and have no effect and
the Secretary of Housing and Urban Development may not issue
any regulation, order, notice, or mortgagee letter based on
or substantially similar to such Mortgagee Letter.
(b) Treatment of Remaining Funds.--Notwithstanding
subsection (a) of this section, any amounts made available
for use under the Program referred to in section 2 of this
Act and expended before the date of the enactment of this Act
shall continue to be governed by the Mortgagee Letter
specified in subsection (a) of this section, and any other
provisions of law, regulations, orders, and notices,
applicable to such amounts, as in effect immediately before
such date of enactment.
(c) Termination.--After the enactment of this Act, the
Secretary of Housing and Urban Development may not newly
insure any mortgage under the FHA Refinance Program referred
to in section 2 of this Act except pursuant to a commitment
to insure made before such enactment, and upon the completion
of all activities with respect to such commitments under the
provisions of law, regulations, orders, notices, and
mortgagee letters referred to in subsection (b) of this
section, the Secretary of Housing and Urban Development shall
terminate the FHA Refinance Program referred to in section 2.
(d) Study of Use of Program by Members of the Armed Forces,
Veterans, and Gold Star Recipients.--
(1) Study.--The Secretary of Housing and Urban Development
shall conduct a study to determine the extent of usage of the
FHA Refinance Program referred to in section 2 by, and the
impact of such program on, covered homeowners.
(2) Report.--Not later than the expiration of the 90-day
period beginning on the date of the enactment of this Act,
the Secretary shall submit to the Congress a report setting
forth the results of the study under paragraph (1) and
identifying best practices, with respect to covered
homeowners, that could be applied to the FHA Refinance
Program.
(3) Covered homeowner.--For purposes of this subsection,
the term ``covered homeowner'' means a homeowner who is--
(A) a member of the Armed Forces of the United States on
active duty or the spouse or parent of such a member;
(B) a veteran, as such term is defined in section 101 of
title 38, United States Code; or
(C) eligible to receive a Gold Star lapel pin under section
1126 of title 10, United States Code, as a widow, parent, or
next of kin of a member of the Armed Forces person who died
in a manner described in subsection (a) of such section.
Amendment No. 3 Offered by Mr. Lynch
Mr. LYNCH. Madam Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
[[Page H1691]]
Page 5, strike lines 14 through 19.
Page 5, line 20, strike ``(b)'' and insert ``(a)''.
Page 5, lines 20 and 21, strike ``Notwithstanding
subsection (a) of this section, any'' and insert ``Any''.
Page 5, line 25, strike ``specified in subsection (a) of
this section'' and insert ``specified in section 2''.
Page 6, line 3, strike ``(c)'' and insert ``(b)''.
Page 6, lines 10 and 11, strike ``subsection (b)'' and
insert ``subsection (a)''.
Page 6, line 14, strike ``(d)'' and insert ``(c)''.
The Acting CHAIR. The gentleman from Massachusetts is recognized for
5 minutes.
Mr. LYNCH. Thank you, Madam Chair.
I want to, first of all, clarify what this bill is intending to do.
The goal of the bill by my colleagues is to end the FHA Refinance
Program. While I do support voluntary workouts--and I think that's the
best way to approach the problem--I want to point out that the bill as
it is written does not allow that to be accomplished by the FHA. Not
only does the bill eliminate the targeted programs that have been
identified, but it also, in its breadth, eliminates the possibility of
any voluntary agreements outside this program. That's what my amendment
would seek to address.
I do know that the CQ House Action Report indicated that I was
amending section 2. However, I want to make sure that they understand
that the language my amendment addresses is section 3: Termination of
FHA Refinance Program.
Basically, to understand it, what this amendment would do is: The FHA
facilitates mortgage workouts and other actions under its purview
through mortgagee letters. These are written guidances to mortgagees,
lenders, HUD-approved counselors and appraisers--essentially, anyone
who is actively providing services on behalf of or with the permission
of HUD. Similar guidance is done for other HUD programs.
Administrative law dictates that the agencies can issue
administrative guidance that interprets statutes and regulations that
we adopt, and it requires public notice and comment, and must be based
on an authorizing statute. The FHA's guidance for lenders comes in the
form of handbooks and these mortgagee letters, which essentially
provide periodic advice and clarification while we are trying to do
these voluntary agreements. Last year, the FHA issued 43 separate
versions of this mortgagee letter. So far this year, it has issued
about 14.
My amendment would strike the text that I believe and that the FHA
believes would interfere with the rest of the work that the FHA is
doing in its operation. These are not areas targeted by the bill by the
gentlewoman from Illinois. The bill provides that anything
substantially similar to what they have prohibited in section 2, which
is a mortgagee letter titled 2010-23, would also be prohibited.
That creates a problem. That stops the FHA from doing a lot of the
other work that both sides agree needs to be done. We are talking about
voluntary agreements where the bank and the servicer and the homeowner
agree. Basically, that would be stopped by this legislation. So I'm not
trying to undo the targeted work that you're trying to do. I'm just
trying to let the FHA do its job in general.
I also want to remind the gentlewoman from Illinois that the FHA, by
itself, cannot recreate the finance program through a mortgagee letter.
It can only do so if it is legislation that is clearly underlying its
action. All the mortgagee letters must go through departmental
clearance and must be viewed by OMB before they become official
guidance. So I am asking that this amendment be accepted to clarify the
action of the bill, itself.
I yield back the balance of my time.
Mrs. BIGGERT. Madam Chairman, I rise in opposition to the amendment.
The Acting CHAIR. The gentlewoman from Illinois is recognized for 5
minutes.
Mrs. BIGGERT. This amendment came up in committee and failed during
our committee markup by a vote of 33-22. The amendment removes all
references to the mortgagee letter issued by HUD concerning the FHA
Refinance Program, and I think that this announcement was the defining
document for the program and provided guidance to lenders on the FHA
Refinance Program.
I think our concern is that the amendment leaves the door open for
the Treasury and for HUD to at a later date create another
substantially similar program to the FHA Refinance Program, again,
without the express consent of Congress.
As the sponsor of the bill mentioned, this program was never
authorized by Congress. The funding came from the TARP moneys that were
set aside for the HAMP program, and the mortgagee letter was
effectively the authorizing document for the program. If this were to
be in, there would be no nullification of the program; it wouldn't be
terminated. This mortgagee letter speaks directly to this program, and
I don't think that it affects the other parts of the FHA. It really
just voids the letter, in doing so, to end the program.
We don't need to further burden the FHA with this program. An FHA
program right now is currently operating below its congressionally
mandated 2 percent capital reserve ratio, and this program has the
potential to further expose taxpayers to FHA losses. Even the
administration has expressed concerns over the new program loan
performance. During testimony delivered to the Financial Services
Committee, the FHA Commissioner testified ``these loans may perform
worse than refinanced loans that were not previously under water.''
This is another example of the administration's using TARP dollars in
questionable ways. I think that the program is similar in scope to the
failed HOPE for Homeowners program established under FHA in 2008, and
even that program has helped fewer than 200 borrowers since its
inception.
So we are concerned that the method of funding for this program
exposes taxpayers to higher levels of TARP money. I don't think that it
affects FHA other than that this program is terminated. This program,
along with its companion programs and the failed HAMP program, should
be terminated, and all unobligated funds associated with the program
should instead be used to pay down the Nation's unsustainable debt. I
would oppose the amendment.
I yield back the balance of my time.
Mr. FRANK of Massachusetts. Madam Chair, I move to strike the last
word.
The Acting CHAIR. The gentleman is recognized for 5 minutes.
Mr. FRANK of Massachusetts. Madam Chair, I regret the fact that my
colleague from Massachusetts, who is a good lawyer and a careful
student of what we do, has drafted a very specific amendment aimed at a
particular point. He has been answered with a lot of general rhetoric,
and I don't think his point was understood. The gentlewoman simply
repeated general rhetoric about the bill.
He is not trying by the back door to reestablish this program. He has
talked to thoughtful people, and is worried about an overreach. I think
the only thing we're seeing now is pride of authorship by whoever
drafted this bill for them. The gentlewoman from Illinois is, as I
said, using a lot of general rhetoric, which is totally unresponsive to
the very specific point my friend from Massachusetts made.
With that, in the hope that if he says it again he might get them to
pay attention to the specifics, I yield to my friend, the gentleman
from Massachusetts (Mr. Lynch).
Mr. LYNCH. Madam Chair, look, I will concede that the gentlelady from
Illinois has raised a lot of good points. Unfortunately, none of them
are relevant to my amendment. If you look at section 2, which is what
you just talked about, that remains intact. That remains intact.
____________________