[Congressional Record Volume 157, Number 43 (Tuesday, March 29, 2011)]
[House]
[Pages H1994-H2017]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE HAMP TERMINATION ACT OF 2011
The SPEAKER pro tempore. Pursuant to House Resolution 170 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. 839.
{time} 1425
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. 839) to amend the Emergency Economic Stabilization Act of 2008 to
terminate the authority of the Secretary of the Treasury to provide new
assistance under the Home Affordable Modification Program, while
preserving assistance to homeowners who were already extended an offer
to participate in the Program, either on a trial or permanent basis,
with Mr. Poe of Texas 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 gentlewoman from Illinois (Mrs. Biggert) and the gentleman from
Massachusetts (Mr. Frank) each will control 30 minutes.
The Chair recognizes the gentlewoman from Illinois.
Mrs. BIGGERT. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise in support of H.R. 839, the Home Affordable
Modification Program, or HAMP, Termination Act and commend my colleague
from North Carolina (Mr. McHenry) for introducing this bill.
H.R. 839, the HAMP Termination Act, would put an end to the poster
child for failed Federal foreclosure programs. Announced by the
administration in February 2009 and launched in March 2009, the program
has languished for 2 years, hurt hundreds of thousands of homeowners,
and must come to an end.
According to the Congressional Budget Office, this bill would save
$1.4 billion over 10 years. To date, the HAMP program has already
consumed $840 million of the more than $30 billion of TARP funds that
were set aside for the program. For this extraordinary investment, the
administration predicted that 3 to 4 million homeowners would receive
help.
Sadly, for many American homeowners, the program has been an abysmal
failure. In fact, HAMP has hurt more homeowners than it has helped. The
program has completed about 540,000 mortgage modifications. Another
740,000 unlucky homeowners had the rug pulled out from under them:
their modifications were cancelled. Even the Government Accountability
Office, GAO, commented that ``more borrowers have had their trial
modifications cancelled than have received permanent modifications.''
Earlier this month, on March 2, the Financial Services Subcommittee
on Insurance, Housing, and Community Opportunity received testimony
from the Special Inspector General for the Troubled Asset Relief
Program, SIGTARP, Neil Barofsky. He exposed the most hazardous failing
of the program, noting that ``there have been countless published
reports on HAMP participants who end up worse off for having engaged in
a futile attempt to obtain the sustainable relief that the program
promised. Failed trial modifications often leave borrowers with more
principal outstanding on their loans, less home equity, depleted
savings, and worse credit scores.'' He continued by saying that ``worst
of all, even in circumstances where they never missed a payment, they
may face back payments, penalties, and even late fees that suddenly
become due on their `modified' mortgages and that they are unable to
pay, thus resulting in the very loss of their homes that HAMP was meant
to prevent.''
Mr. Chairman, many of my own constituents, like homeowners around the
country, were lured into HAMP with the promise of relief. In the end,
these misled homeowners ended up with no permanent modification, tens
of thousands of dollars deeper in debt. One of my constituents reported
that after many, many months under a trial modification, he was
rejected from the program and immediately handed a bill for $42,000 in
back payments, penalties, and late fees. How is that an effective
foreclosure protection?
[[Page H1995]]
HAMP has been plagued by problems from the start and is beyond mere
reform. Numerous oversight bodies, including the GAO, have cited time
and time again that Treasury has failed to respond to recommendations
to ``increase the transparency, accountability and consistency of the
program.'' Last year, the Congressional Oversight Panel, or COP, noted
that ``because Treasury's authority to restructure HAMP ended on
October 3, 2010, the program's prospects are unlikely to improve
substantially in the future.''
{time} 1430
COP also stated that ``billions of taxpayer dollars will have been
spent to delay rather than prevent foreclosures.'' It is clear that the
administration has no intention of fixing the numerous problems in its
flagship foreclosure program, a fact which has not gone unnoticed by
the public.
Americans for Tax Reform submitted testimony for our March 2 hearing,
stating that ``HAMP has been the U.S. Treasury and Department of
Housing and Urban Development's primary spending program for combating
foreclosures, and the program has been a costly failure.''
Headlines around the country agree. A recent Washington Times article
said that ``Obama's helping hand hoodwinks homeowners; government
mortgage assistance can be worse than nothing.'' A recent Wall Street
Journal article was entitled ``Housing Market Masochism; the latest bad
idea to raid banks and delay a home-price recovery.''
We need to break down the barriers that have delayed the housing
market recovery, including expensive and ineffective programs that have
hurt so many homeowners. Unfortunately, programs like HAMP were set up
in haste and have done little to restore stability in the market.
We need to stop funding programs that don't work with money that we
don't have. Out-of-control Federal spending is hurting our economic
recovery. Our Nation faces a $14.2 trillion national debt, and
economists agree that reducing government spending will create a more
favorable environment for private sector job growth. That's exactly
what unemployed Americans and homeowners need: a job and a paycheck,
not a handout or other failed taxpayer-funded government programs.
I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield 3 minutes to a member of the
committee, the former mayor of Somerville, Massachusetts (Mr. Capuano).
Mr. CAPUANO. I thank the gentleman for yielding.
Mr. Chairman, this is a program that I'm the first to admit has not
lived up to what our hopes were. This program we had hoped would help
several million people. Thus far we've only helped about 550,000
people. I fully admit that this program, like all the other foreclosure
programs, could use a healthy dose of reconsideration and improvement,
and I'm happy to work with that.
But to simply repeal all of these programs is to walk away from
individual homeowners, walk away from neighborhoods.
In this particular case, last week before the break, we walked away
from neighborhoods. We walked away from cities and counties all across
the country. In this case, we're walking away from homeowners.
In this particular bill, as I said, this program, short of what we
had hoped, it has still helped 550,000 homeowners to keep their homes,
550,000 with approximately another 150,000 on trial as we speak. And
550,000 homes, just as a point of information, is more owner-occupied
homes than exist in at least 17 different States. Wyoming, Alaska,
Utah, Nevada, New Mexico, Nebraska, and on--all individually have fewer
homes in the entire State than this program has helped. Yet we're going
to walk away.
Every single State in this Nation has homeowners who have been
helped. In Illinois, 29,000 homes have been saved; in North Carolina,
10,000 homes; in my own State, 12,000 homes and counting.
Again, I'm not going to defend the specifics or every single aspect
of this program that has been put together, and I am happy to work with
anyone to make it better, to help more people to keep their homes, keep
their families together. But to simply walk away without offering an
alternative means we don't care; this Congress doesn't care if you lose
your home, period. Well, I understand that that's what some people want
to say. They're entitled to do that. They're duly elected and have the
power and authority to do that. But I just can't imagine they could
look at the individual constituents in their district and say to their
face, We don't care.
And if you feel that strongly about it, then you should not just
repeal the program prospectively; you should repeal it retroactively
and tell the 550,000 people whose homes have been saved, We didn't mean
it, it was a mistake, we didn't support it then, and as far as we're
concerned, you can leave your home tomorrow.
Now, I understand if that makes me a bleeding-heart liberal according
to some people, so be it. Call me any name you want. But if you have
the courage and the audacity to look at your own constituents and tell
them forget it, you don't care, I would encourage you to do so.
Mrs. BIGGERT. I yield 5 minutes to the gentleman from North Carolina
(Mr. McHenry), the sponsor of this bill.
Mr. McHENRY. I thank the gentlewoman for yielding the time.
The HAMP Termination Act, which is the legislation before us today,
ends what I believe to be a failure of a government program. Not just a
failure to help those 3 to 4 million homeowners that the Treasury
originally set out to assist, and they've fallen well short of it--just
over 500,000 mortgage modifications have taken place in the 2 years
it's been in existence. Not only has it been a failure in terms of the
metrics they set up to achieve the goal; it's been a failure for the
very people who enter into the program and yet are pushed out.
Now, I want my colleagues to understand what this government program
does. The HAMP program, the Home Affordable Mortgage Program, brings
folks in who are having trouble making their mortgage payments. They
bring folks in, and they will give them a verbal modification for their
mortgage. And what has happened--and this is what my constituents tell
me and this is what the hard facts and the data indicate as well--is
that a majority of those folks that enter into this program are
actively harmed by this Federal program. Actively harmed. They are left
materially worse off.
And let me quote from the Special Inspector General for TARP, Mr.
Neil Barofsky, who is a very independent-minded individual. He said
that people who apply for modifications via HAMP sometimes ``end up
unnecessarily depleting their dwindling savings in an ultimately futile
effort to obtain the sustainable relief promised by the program
guidelines. Others, who have somehow found ways to continue to make
their mortgage payments, have been drawn into failed trial
modifications that have left them with more principal outstanding on
their loans, less home equity, or a position further underwater, and
worse credit scores. Perhaps worst of all, even in circumstances where
they never missed a payment, they may face back payments, penalties,
and even late fees that suddenly become due on their modified mortgages
that they are unable to pay, thus resulting in the very loss of their
home that HAMP is meant to prevent.
``Treasury's claim that every single person who participates in HAMP
gets a `significant benefit' is either hopelessly out of touch or a
cynical attempt to define failure as success.''
Those are the words of the Special Inspector General designated to
oversee this program and to report to Congress and the public on the
success or failures of Federal programs and ways to fix them.
Now, sadly, in the 2 years of this program and over 1\1/2\ years of
criticism of this program, the Treasury has refused to fix it. My
colleagues on the other side of the aisle have not offered legislation
to fix it when they were in the majority. So we're left with what is
required today, which is to root out this Federal program that spends
our taxpayer dollars, yet hurts more people than it helps.
One of my constituents from Hickory said, ``We've been in the HAMP
program since February of 2010 and still have no answer. We're being
charged
[[Page H1996]]
late fees and we were reported to the credit bureau. We've been
underwater since April and on trial payments for 6 months, which was
only supposed to be 3 months. We have not yet received an answer.''
This is a Federal program. If the private sector were doing this,
there would be lawsuits. If the private sector were doing that, my
friends on the other side of Congress in particular would be filing
legislation to make sure they were unable to do that.
Instead, my colleagues on the other side of the aisle and this
administration are defending a failed program. And they refused to
reform it. They refused to change. They refused to improve it. They
refused to do anything to it except defend it. And I believe, indeed,
as the Special Inspector General said, it may be a cynical attempt to
define failure as success.
So I ask my colleagues to vote for this legislation and remove this
costly, ineffective, and painful government program.
{time} 1440
Mr. FRANK of Massachusetts. I yield 3 minutes to the gentlewoman from
New York (Mrs. McCarthy), a member of the committee.
Mrs. McCARTHY of New York. Mr. Chairman, let me say something first.
In the beginning of this program, we didn't have any service. That
means there were no people out there to help those that were trying to
apply. But we have seen encouraging signs in the economy; yet we are
still on a long path towards economical recovery. Many of my
constituents are still facing hardship, including trying to keep their
homes.
When the housing crisis hit, the private sector responded by turning
their backs on those that needed the help. As a result, Congress
stepped in and created housing programs to hold the industry
accountable and to help these families weather the worst housing crisis
that we have seen in generations.
Now, thanks to the leadership of the President and the Democratic-
controlled 111th Congress, we are seeing more and more servicers
adopting their own programs, largely based on the eligibility criteria
within the programs such as HAMP.
The past few weeks my colleagues on the other side of the aisle have
brought bills to the floor to terminate these programs, claiming they
have done more harm than good to the homeowner and that struggling
homeowners are in better hands with the private companies that
contributed to the housing crisis in the first place. Most of the
homeowners got in trouble because the private sector is the one that
got them in the problems.
I disagree with that and point to constituents who have reached out
to my office for help because their servicers were not being
responsive.
The bill before us totally terminates the HAMP program; however, it
protects assistance to the homeowners in a trial or a permanent
modification.
My amendment, which was not made in order, would have expanded that
provision to include homeowners who, on or before March 1 of this year,
submitted required paperwork for HAMP or had made a verified request to
their servicers seeking that modification.
My district office has heard from dozens and dozens of my
constituents who have been waiting for up to 16 months, 16 months for a
response from their servicer regarding the eligibility for HAMP. They
reach out to my office at the point of total frustration due to the
lengthy response time when they have submitted the required paperwork.
I shudder to think what the response rate would have been without this
program in place.
It's very disheartening that my colleagues on the other side of the
aisle would like to shut down these distressed homeowners before they
have even a chance to qualify for the assistance.
The HAMP program was by no means perfect. Everybody agrees on that.
Nor was it meant to be permanent. We all agree on that. Instead, it was
meant to hold the mortgage service industry accountable and responsive
to those that needed the assistance.
At a time when our housing market is still very fragile and
foreclosures continue to occur in record numbers, instead of
terminating these programs, we should be trying to improve them.
During the markup in committee, when we were trying to improve, we
asked our colleagues, all right, let's not terminate it; let's try and
fix some of the things that are not right.
The CHAIR. The time of the gentlewoman has expired.
Mr. FRANK of Massachusetts. I yield the gentlewoman an additional
minute.
Mrs. McCARTHY of New York. Supporting efforts to terminate these
housing assistance programs means turning your back on your own
constituents.
Mr. Chairman, we have our disagreements. There's no two ways about
it. But with that being said, to judge a program from the beginning
when we couldn't get servicers, now we are getting servicers, now we
are getting people to be responsive on getting people to stay in their
homes.
And think about it: All these homes that are being lost to families,
where are they supposed to go? In New York, you can't find an
apartment, so what are we doing, making more people homeless?
It was not the fault of the homeowners. I agree, there were many
people that shouldn't have probably bought a house for $700,000 or
$800,000. The majority of us here in Congress couldn't even afford
something like that. They should have never been given a mortgage. All
of us, when we bought our homes, had to go through the third degree.
How much money do you earn? Can you pay the insurance? Can you pay your
taxes?
That's why we also put legislation in there to have the servicers
help them.
Mrs. BIGGERT. Mr. Chairman, if I might inquire how much time is
remaining on both sides.
The CHAIR. The gentlewoman from Illinois has 19\1/2\ minutes
remaining. The gentleman from Massachusetts has 23 minutes remaining.
Mrs. BIGGERT. I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from
Delaware (Mr. Carney).
Mr. CARNEY. Mr. Chairman, I rise today to oppose this ill-advised
effort to repeal the Home Affordable Modification Program. Instead, we
ought to be focusing on how we can move together, Democrats and
Republicans, to address the foreclosure crisis and keep families in
their homes.
Since the housing bubble burst, over 9 million Americans have gone
into foreclosure. In my little State of Delaware, annual foreclosure
filings nearly tripled over the past few years. And we aren't even one
of the worst, hardest hit States.
Now, one thing is clear. We can't help every one of these homeowners.
Every situation is different; and, frankly, not every homeowner can or
should be helped. And most of the help should come from the banks and
mortgage servicers, but they are not doing nearly enough in the State
of Delaware.
What is incredible to me is that, with the HAMP Termination Act, our
friends on the other side of the aisle have decided not to help at all;
and that will mean a more direct path to foreclosure for thousands of
families.
The claim is that HAMP has hurt more people than it has helped. That
is simply a ridiculous charge. Back in my home State of Delaware, the
HAMP program has helped 1,600 homeowners, by far the most effective
government program. That's 25 percent of the homeowners who filed for
foreclosure last year.
And I know a little bit about this. I served as the chair of the
foreclosure task force when I was lieutenant governor for over a year.
And the best course, the best result we know is for the private
banks, as I said, and the servicers to make the modifications
necessary, for the private sector to shoulder the bulk of the burden.
But they're just not doing it. And so public officials need tools to
help out, and HAMP is one of the best tools we have.
The real question here is whether you believe there is an appropriate
role for government at all to help homeowners facing foreclosure
through no fault of their own. It's okay to use taxpayers funds to bail
out the banks, but my friends on the other side don't want to use a
small amount to help homeowners.
Mrs. BIGGERT. I yield myself 30 seconds.
The gentleman from Delaware talks about his State. Let me just say
that
[[Page H1997]]
in Illinois, if we look back quarter by quarter, HAMP permanent
modifications, for example, in the second quarter of 2010 were 167,000;
but the proprietary were 331,883. The next quarter, 97 HAMP and
346,910. And it goes on. And I think that's something to keep in mind,
that the private sector can do it better.
The CHAIR. The time of the gentlewoman has expired.
Mrs. BIGGERT. I yield myself another 30 seconds.
The private sector, out of 4.1 million modifications, 3.5 million of
those were private sector, and the rest of the 550. And that doesn't
include the 750,000 modifications that were made by HAMP that were
canceled.
I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield myself 90 seconds to say that
that is an extraordinary bit of illogic we have just heard. The private
sector, nothing in the existence of HAMP in any way retards people from
going to the private sector.
If you listen to the gentlewoman, you would get this fantasy picture
that people were being restrained by the Federal Government not to go
to the private sector, go to HAMP.
In fact, HAMP is also the private sector. That's part of the problem.
It is also a private sector decision with no coercion by the
government. Some people wish there was more.
But, yes, it is true the private sector has done the easy ones on its
own. And anybody who wants to go to the private sector and get it does
not have to go to HAMP. But there is no requirement that people go to
HAMP.
And this set-up that it's a choice, you have to go to one or the
other, people are free to go to the bank. If the bank won't do it, then
they may go to HAMP. So this is an absolutely illogical notion that one
blocks the other.
The other point is that HAMP is the Federal Government bringing
people into contact with the private sector. It is still ultimately a
private sector decision.
Part of the problem here is that it remains voluntary. I wish we had
passed in this House bankruptcy. You know, you can go bankrupt for
anything but your primary residence. And my Republican friends
overwhelmingly blocked that from happening. And absent that, we don't
have the leverage with the private sector we'd like to have. But it is
in every case the private sector that decides. And if it is a
relatively easy one to do, the private sector does it without any
hindrance.
{time} 1450
If there is a problem, then you go into the HAMP.
The other point is, and I have been waiting to hear, Members have
said more people are harmed than helped. That statistic appears nowhere
in the record, and I wait to see it explained.
I reserve the balance of my time.
Mrs. BIGGERT. I yield 2 minutes to the gentleman from Pennsylvania
(Mr. Fitzpatrick).
Mr. FITZPATRICK. Mr. Chairman, I rise today in support of H.R. 839,
the HAMP Termination Act.
I was sent to the Nation's capital like so many Members of the 112th
Congress, to do something about cutting back on wasteful Washington
spending, to do something about the $14 trillion national debt. And in
pursuing this goal, we have made many difficult decisions about funding
government programs. At a time when families and businesses across
Pennsylvania are being asked to do more with less, we cannot continue
ineffective Federal spending. Like so many programs hatched in
Washington, HAMP has been one of those programs that, while well
intentioned, has grossly missed its mark.
Established in 2009 to assist homeowners seeking to avoid
foreclosure, of the $30 billion allocated to the program, only a
fraction has been spent. And of the homeowners expected to be helped
through the program, only one-eighth have seen any permanent
modification.
Despite the fact that U.S. taxpayers have given lenders an average of
$20,000 for each participating homeowner, there is nothing that
prevents a lender from still foreclosing after the modification. That
means that the bottom line of the HAMP program is this: False hope for
homeowners who see the Federal Government send thousands to big lenders
only to lose their homes a few months later.
According to the Special Inspector General of TARP programs, ``there
have been countless published reports of HAMP participants who end up
worse off for having engaged in a futile attempt to obtain the
sustainable relief that the program promised. Failed trial
modifications often leave borrowers with more principal outstanding on
their loans, less home equity, depleted savings, and worse credit
scores.''
As we work to rein in government spending, to create certainty,
confidence and, ultimately, jobs, this program, well intentioned as it
is, has not been tax dollars well spent.
I urge my colleagues to support the bill.
Mr. FRANK of Massachusetts. I yield 3 minutes to another member of
the committee, the gentleman from Indiana (Mr. Carson).
Mr. CARSON of Indiana. Over the last few years, the United States has
faced a devastating economic crisis.
As a result of the economic downturn, many homeowners have lost their
homes or are at imminent risk of foreclosure. That is why the Obama
administration launched the Federal Home Affordable Modification
Program: to stem the escalating tide of home foreclosures and the
disastrous impact it has on families and their communities.
HAMP's purpose is to help eligible homeowners avoid foreclosure by
providing them with permanent loan modifications to terms they can
afford. Although this program is far from perfect, it has helped more
than 600,000 families lower their mortgage payments and stay in their
homes. H.R. 839, the HAMP Termination Act of 2011, will end this
program and is the latest effort by House Republicans to end
foreclosure avoidance and mitigation programs.
With forecasts showing that there will be 3 million foreclosures
nationwide this year and the housing turnaround not expected for at
least 3 years, Republicans have yet to offer any alternative to help
solving our housing crisis.
Republicans have also failed to address the impact this crisis is
having on minority communities. An estimated 17 percent of Latino
families and 11 percent of African American families have lost their
homes or are at imminent risk of losing their homes.
Eliminating support for distressed homeowners at this point in time
would be disastrous for neighborhoods trying to recover from the
foreclosure crisis. Instead, we should focus our efforts on ways to
make HAMP a useful, wide-reaching program with meaningful goals, goals
such as pushing lenders to reduce the principal on loans that are
underwater and give struggling homeowners real relief.
I urge opposition to this misguided bill.
Mrs. BIGGERT. I yield such time as he may consume to the chairman of
the Financial Services Committee, the gentleman from Alabama (Mr.
Bachus).
Mr. BACHUS. I thank the gentlewoman.
As Republicans and Democrats, let's talk about what this bill does.
This bill shuts down a Federal program which spends money. Every dime
of that money, of the over 1,000 million dollars, has already been
spent, and they have authorized $29 billion more to be spent. Now,
that's taxpayer money; and that is money that, in 2008, we promised the
American people, when the banks paid it back, that it would go into the
Treasury. That was a promise that we made. So this bill keeps that
promise, and that's that the money will be returned to the Treasury.
Now, why do we make that promise and why do we defend that promise
today on the floor of the House? Because, ladies and gentlemen, we are
spending our children and grandchildren into financial oblivion. We are
threatening the national security of this country.
Now, where do I get such a fact as that? Why do I say that it is a
threat to national security, which I said last week and I was
criticized?
Well, let me quote Defense Secretary Robert Gates when he said 2
months ago, ``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.''
[[Page H1998]]
And I was told, well, that didn't say that it was a threat to our
national security. But following that statement, Admiral Mike Mullen
made this statement, the Chairman of our Joint Chiefs of Staff, ``The
most significant threat to our national security is our debt.'' In case
you weren't listening, let me say that again. ``The most significant
threat to our national security is our debt.'' Now, that wasn't a
Republican on the floor of the House. That was the Joint Chiefs of
Staff's Mike Mullen.
We are spending $1.42 for every $1 we get. We are borrowing 42 cents
of that. Twelve percent of our debt is owed to the Chinese. Every day
we write the Chinese a check for $120 million. They could buy the most
advanced strike jet fighter in the world and still have $20 million to
put in their pocket each day. In 1970, only 19 percent of our national
debt was owed to other countries; today, it approaches 50 percent.
Now, let's not talk about whether we can afford this program; let's
talk about whether our children and our grandchildren can, because--
let's not kid ourselves--we can't pay it back. Now, do we want to spend
$30 billion of our children's and our grandchildren's money?
{time} 1500
First of all, should we do that morally? But let's just assume that
you say yes, we should do this with our children and grandchildren's
money. Well, who should we pay that money to?
You talked about the banks. Where does this money go? It goes to the
banks. Every dime of it is paid to a bank. You have a borrower, you
have a lender. As many of you have correctly said, and I agree with
you, people loaned homeowners money they couldn't afford to pay back.
And is that the taxpayers' fault? Should they pick up the bill? No. It
is the bank's, or it may be the homeowner's. But the people that ought
to pay it back are not the taxpayers, and if it can't be paid back, the
banks ought to take the loss.
You talk about the homeowners, but it is the banks that will be paid.
And you talk about 500,000 Americans that have been helped. You didn't
mention almost 1 million that have been made worse off. Now, again, is
that some mean Republican saying they are worse off? No.
Today, March 29, a letter from the largest national Hispanic civil
rights and advocacy organization in the United States. Do you know who
that is? It is La Raza. What did they say? Let me quote what the
largest, and I think we would all agree, a very liberal organization,
what did they say?
I urge you to vote ``yes'' on this legislation, they said.
``Structural flaws, especially the voluntary nature of HAMP, have
resulted in an abysmal performance by mortgage servicers and hundreds
of thousands of families losing their homes to foreclosure
unnecessarily.'' They say this program has resulted in hundreds of
thousands of American homeowners losing their homes.
Now, are they the only people who have said this? No. Our own
Inspector General, our own Neil Barofsky, SIGTARP, who was put in
charge of monitoring this program, what did he say? Let me quote what
he said. ``HAMP benefits only a small portion of distressed homeowners,
offers others little more than false hope, and in certain cases causes
more harm than good.'' When did he say that? He said it this month
before our committee. This month.
How about the Congressional oversight panel, a majority of which are
Democrats. What did they say? They said billions of taxpayer dollars--
billions, billions--will have been spent to delay rather than prevent
foreclosures.
Now, that is not Republicans who are getting some crazy idea that
this program isn't working. No. It is Democrats.
And who has President Obama appointed to temporarily run the Consumer
Financial Protection Bureau? Well, it is Elizabeth Warren, we all know
the answer to that. What does Elizabeth Warren say about this program?
Let me quote what she said. Just the facts. Not Spencer Bachus, not
Patrick McHenry, not Judy Biggert. No. Elizabeth Warren, who works out
of the White House and who is in charge of consumer protection. Here is
what she said, December 14th: ``Because Treasury's authority to
restructure HAMP ended on October 3, 2010, the program's prospects are
unlikely to improve substantially in the future.'' In other words, they
are not going to improve this program.
So let's end by saying this. We say shut it down. You say mend it.
Let's mend this program. Why? Let's not pretend. We are not talking
about mending. We are talking about pretending. The Treasury, according
to Elizabeth Warren, doesn't even have the ability to do that.
The administration itself, not someone here, but your administration,
Laurie Maggiano, a Treasury official, said at the Mortgage Banking
Conference February 24, just a month ago, ``You won't see any major new
programs coming out. We may tweak around the edges, but our primary
objective in 2011 is excellence in the program we have.'' Well, there
has been no excellence in the program. It has failed. The largest
Hispanic group in America has said, end this program.
But I tell you what, our grandchildren and children would say this,
and you continue to say, and I agree with you, we have got 13 million
American families underwater with their mortgages, and you want to pick
and choose 500,000 of those to help. What about the others? Should the
Federal Government pay everybody's mortgage that is behind?
Why, one out of four American families are underwater on their home.
You have got, it just came out yesterday: 13 million vacant houses in
America, and almost immediately you come up with a cash-for-keys
program where you are going to buy these abandoned properties from the
banks, from the speculators.
I don't think you have listened to the American people. I don't think
you heard what they said in November. This program has been criticized
ever since its inception. You haven't mended it. You are talking about
mending it today.
Where is your bill to mend it? Is there a bill to amend it? Have you
introduced it? Is there a bill?
Mr. FRANK of Massachusetts. Will the gentleman yield?
Mr. BACHUS. I yield to the gentleman from Massachusetts.
Mr. FRANK of Massachusetts. Yes, we are introducing legislation to
make sure that the taxpayers are off the hook.
Mr. BACHUS. You will be?
Mr. FRANK of Massachusetts. We have introduced a bill to restore a
provision that was knocked out by Republicans.
Mr. BACHUS. Is the gentleman saying you will be?
Mr. FRANK of Massachusetts. It has been filed.
Mr. BACHUS. What, today? Was it filed today, or Monday?
Mr. FRANK of Massachusetts. No, last week. Last week.
Mr. BACHUS. Last week. Two years----
Mr. FRANK of Massachusetts. The gentleman doesn't want an answer,
apparently.
Mr. BACHUS. I reclaim my time. One thousand million dollars and $29
billion of authorization, 2 years of a failed program, and the week
before we come to the floor, you file a bill. You file a bill. I'm
sorry to say to the ranking member, you can file the bill, we will take
a look at it, but we are ending this failure.
Mr. FRANK of Massachusetts. I yield myself 2 minutes.
I regret the chairman's refusal to allow me to answer the question he
asked.
Yes, we just filed the bill because we are restoring a provision that
was in the financial reform bill. The gentleman, who has shown very
little regard for the taxpayer in his own vote sending money to
Brazilian cotton farmers--and, by the way, I wish he had listened to
Secretary Gates and Admiral Mullen and not voted to force on them money
for weapons systems they didn't want. They said those things when they
tried to get the Congress not to give them weapons they didn't want,
but many of my Republican friends, the majority, disregarded that.
But in the TARP legislation we said that in 2013, when this program
ends, any penny that was spent and not returned to the taxpayers will
come from the banks, will come from the hedge
[[Page H1999]]
funds. And we can anticipate Republican opposition to that, because in
the financial reform bill last summer, already passed, not recently
introduced, we say that for many of these programs to recover the costs
of the foreclosure mitigation and dealing with the results of
foreclosure, we would get it from large financial institutions. The
Republicans objected to that, and the Republicans insisted in the
Senate that it be knocked out. So every time we have tried to get money
from the large financial institutions to pay for the costs of the
damage their irresponsibility inflicted, the Republicans have opposed
it.
Again, when it came to Brazilian cotton farmers or weapons the
Pentagon didn't want or infrastructure in Afghanistan or Iraq Security
Forces, all of the things the gentleman from Alabama voted for that
comes out of the taxpayers' hide, and then he votes against and opposes
our legislation already passed and just reintroduced to have the large
financial institutions pay for this. So his concern for taxpayers comes
into play when we are trying to help people who are in need, but it is
not in play when we are talking about heavy defense contractors,
Brazilian and American cotton farmers, or the large financial
institutions, because he and his fellow partisans have consistently
fought every effort we have made to get the large financial
institutions to bear this cost. But we do have still, as people will
hear later, provisions to do that.
{time} 1510
Mrs. BIGGERT. May I request again the time remaining, Mr. Chairman?
The CHAIR. The gentlewoman from Illinois has 5 minutes. The gentleman
from Massachusetts has 15\1/2\ minutes.
Mrs. BIGGERT. Mr. Chairman, I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield 5 minutes to the gentleman from
North Carolina (Mr. Miller).
Mr. MILLER of North Carolina. Mr. Chairman, I rise to oppose this
bill, but I do so with mixed feelings because I have been one of the
critics of the HAMP program.
The members of the majority have pointed out correctly that this
program has been widely criticized for more than 2 years. It has been
criticized by the congressional oversight panel, by the SIGTARP
(Special Inspector General for the Troubled Asset Relief Program), by
La Raza, by Elizabeth Warren, and, yes, by me. But I have not
criticized it for the reasons that the gentleman from Alabama gave. If
this bill is keeping a promise, it is not a promise made in open to the
American people, it is keeping a promise made in secret to the banks,
because the costs of this program are not going to come out of the
pockets of the American people. This comes out of the TARP program.
That legislation said that any money not recovered by 2013 has to be
recovered from the financial industry, and whoever's present in 2013
has to propose to Congress exactly how it is we're going to get that
money back.
They can afford it. Thirty percent of all corporate profits are in
the financial sector. They can more than afford it.
The gentleman from Alabama frequently says that he hates visiting
debt on his grandchildren, and I believe him when he says it, but I
have good news for him. Unless his grandchildren take a job on Wall
Street in the next 2 years, they are not going to have to pay this
debt. This debt, if Congress does keep its promise to the American
people, will not come from the American people. It will come from Wall
Street. It will come from the people who created the mess that we are
now trying to clean up.
But I have criticized this program because it is not as effective as
it should be. It has gone on for 2 years. It is not what we need. The
problem, however, has not been what government has made banks do. This
program has been run by the banks. It has not been run by the
government. It has been run by the banks. Every horror story about a
homeowner's being abused is being abused by a bank, the bank handling
the mortgage, not by the Department of the Treasury, not by the Federal
Government.
So, of course, when they come to see a Republican Member of Congress,
the Republican Member of Congress says, ``Oh, isn't it terrible what
the Federal Government made that poor bank do to you.'' No, the Federal
Government didn't make the banks do that.
My criticism of this program and my criticism of the Obama
administration in how they have run this program is not that they've
made banks do what they've done, but they have let banks do what
they've done. This program can work if there are some tough rules that
are really enforced, tough on the banks.
The gentleman from Massachusetts mentioned earlier the bankruptcy
proposal 3 years ago. I introduced that bill. I have been trying to put
rules, requirements, on the banks that they let people out, that they
try to begin to let people out in a very orderly, logical, fair way,
through judges, through a judicial process, to begin to get control of
the collapse of the housing market.
Something has got to happen to stop the continuing fall of housing
values. Something has got to happen to end the cycle of foreclosures
and diminished home values and more foreclosures. Republicans have
offered nothing to do that. We know something can work. We know that we
can design a program that will work, because it has been done before.
In the New Deal, one of the most successful programs in the New Deal
was the Home Owners' Loan Corporation which bought mortgages, modified
them, worked with homeowners, tailored the mortgages to something the
homeowner could buy for those homeowners who really could afford a
house, the house that they were in but not the mortgage that they had,
and most historians say that program saved the housing market in the
Great Depression and saved the middle class.
We have got to make something work. There are rules on the horizon.
There is now a pending settlement negotiation for the violations of law
by the banks in how they've managed mortgages. It is with States
attorneys general and it is with the Federal regulatory agencies. Some
on the Republican side have publicly pressured the Federal agencies to
lay off the banks. I really cannot tell much difference between what
they are doing in the pressure they are putting on banks and the
regulatory agents in an enforcement matter and what happened a
generation ago with the Keating Five. But they're doing it. They're
saying, ``Lay off our buddies the banks. Don't come down too hard on
them.'' But there is a real possibility the result of that settlement
will be some tough rules, and there is now rule-making authority. There
is now a cop on the block. The CFPB has the authority to develop rules
for banks in how they manage mortgages.
But something has to work. This has not been working. It can be
fixed. It has to be fixed. Something has to work.
Mrs. BIGGERT. I yield 1 minute to the gentleman from North Carolina
(Mr. McHenry).
Mr. McHENRY. I thank my colleague for yielding, and responding to my
colleague from North Carolina, Mr. Chairman, I would say that we agree:
The HAMP program is a failure. I think there is bipartisan agreement on
that. Even the SIGTARP, Mr. Barofsky, says, ``The Treasury Department
is so content with the wretched, shameful status quo, they refuse to
even acknowledge the program is a failure.'' We agree. It's a failure.
Although it sounds like, at the end of the day, he is going to vote to
defend a failed program.
Secondly, I would remind my colleague that this program actually
writes checks to those evil banks that he talks about, with those evil
profits that he talks about, to the tune of about a billion dollars. So
this program is actually cutting checks to banks.
Third and finally, that TARP money is actually the taxpayer, the
American people's money, not the banks' money, and we owe it to the
American people to give them back that money.
Mr. FRANK of Massachusetts. How much time do I have remaining, Mr.
Chairman?
The CHAIR. The gentleman from Massachusetts has 10\1/2\ minutes.
Mr. FRANK of Massachusetts. I yield 3 minutes to the gentleman from
Minnesota (Mr. Ellison).
Mr. ELLISON. Mr. Chairman, this bill is just like saying, ``You know
what, you said you were going to give
[[Page H2000]]
us a loaf of bread, but you only gave us a slice. So because you didn't
give us the whole loaf, we're going to take all of the bread away, even
the slice.''
Because the program isn't as successful as it could be, we ought to
be getting in here and doing something about all the foreclosures
across America as opposed to what the majority wants to do, which is
get rid of even the meager program that exists.
This is unresponsive government. This is government that is turning
its back and folding its arms on the American people. We've got 4
million foreclosures, and may end up with 7 million, and yet instead of
trying to make a program work, we just get rid of the whole thing. This
is a really sad day and a big mistake.
If you want to get up here and criticize the HAMP program, you can do
that. But you know what: The HAMP program has come up with more than
600,000 active modifications. That's not nearly enough of what we need,
but it has done something. Rather than get the program right, we
abandon all those people who are underwater, all those people who are
in foreclosure. That is a shame, and it's wrong.
Now let me say, Mr. Chairman, the fact is that this program, this
HAMP program that we're terminating today, this program, doesn't do
anything to put Americans back to work. It doesn't do anything at all.
The Republican majority has been here for 13 weeks and all they've done
is cut programs that could put people to work. They haven't tried to
fix anything that's not working. They've just tried to cut back on what
America needs.
So that we will be in a position when people aren't working, they
won't be paying taxes, we won't be even addressing this deficit because
of the Republican no jobs agenda. It's really too bad. We were sent
here to do something about jobs. We were sent here to do something
about foreclosures. We're not doing anything about either, because the
Republican majority refuses to address it.
One of the biggest problems with the HAMP program, now that we're on
that subject, is that we did just allow incentives. We didn't really
make the banks and the services do what they should do, which is to
readjust these mortgages. People bought at bubble prices based on
Republican majority decisions to not regulate, to abandon consumer
protection, and this bubble market created expansive and big prices.
The loans people got, we didn't see consumers get protected from no
doc, low doc, NINJA loans. We didn't see any protection for the
American taxpayer with any of these financial regulations involving
derivatives. And yet when the bubble burst, the people are there to try
to pick up the pieces.
But what does the Republican majority do? They just take away the one
slice that might help some people instead of trying to do something to
help the American people.
I hope the American people are watching this debate today, Mr.
Chairman. I just hope they take careful note of who is on the side of
the American neighborhood, who is on the side of the American people,
and who's trying to take away that American Dream.
{time} 1520
The CHAIR. The gentlewoman from Illinois has 4 minutes remaining.
Mrs. BIGGERT. Mr. Chairman, I have no further requests for time, and
I reserve the balance of my time.
Mr. FRANK of Massachusetts. I yield 3 minutes to the gentleman from
North Carolina (Mr. Watt).
Mr. WATT. I thank the gentleman for yielding.
As best I can discern, the argument about the HAMP program is we
should terminate it because it's run inefficiently. That seems a fairly
strange argument for most of us around here because we know that there
are inefficiencies in every department of the government. If you use
that as the touchstone for terminating programs, we would close down
the entire Defense Department; we would close down the Department of
Commerce; we would close down the Department of Health and Human
Services. We would go right down the list and close them all because
every one of the departments and every program has some inefficiencies
in them. You don't solve the problem by closing a program. You solve
the problem by trying to correct the problems that exists.
This is a whole new philosophy for this group of people, because when
the Securities and Exchange Commission was not equipped to fine the
Bernie Madoff episode, their answer to it was let's cut out the SEC or
let's reduce this budget, not make it more efficient so that it can
stop the kind of fraud and abuse that was taking place, let's just
starve it to death. That's the same philosophy that's being applied in
this context, Mr. Chairman. Because the program is inefficient, which
all of us agree it has been, their answer is let's close it down. Ours
is to make the program more efficient and work for the purposes for
which it was intended; and that's what we ought to be devoting our
attention to today, not terminating the program.
Mrs. BIGGERT. I yield 15 seconds to the gentleman from North Carolina
(Mr. McHenry).
Mr. McHENRY. I will respond to my colleague, Mr. Chairman, that, if
we can't eliminate this failed program, what program can we eliminate?
Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself the balance
of my time.
The CHAIR. The gentleman is recognized for 5 minutes.
Mr. FRANK of Massachusetts. Well, let me begin with my friend from
North Carolina. $150 million a year to Brazilian cotton farmers, which
the gentleman voted for. Now, what we could have done was, instead of
giving them $150 million--
Mr. McHENRY. Will the gentleman yield?
Mr. FRANK of Massachusetts. I yield to the gentleman from North
Carolina.
Mr. McHENRY. Mr. Chairman, I didn't vote for the farm bill.
Mr. FRANK of Massachusetts. No, the question was not the farm bill.
It was the amendment from the gentleman from Wisconsin to cut out $150
million that is being voted subsequent to the farm bill to the cotton
farmers of Brazil.
We had an amendment offered by the gentleman from Arizona (Mr. Flake)
and the gentleman from Wisconsin (Mr. Kind) not to pay $150 million a
year to Brazilian cotton farmers. We were told that we had to do that
because otherwise we would be in trouble. But we had an alternative. We
could have knocked $150 million out of the subsidy to American cotton
farmers. That's $300 million a year that we are losing.
We have the second engine on the F-35. My friend on the other side,
the gentleman from Alabama, quoted the Secretary of Defense and the
Chairman of the Joint Chiefs of Staff saying national security is at
risk, but then they vote against him and force on him money he doesn't
want. The gentleman from Alabama voted for a second engine. The
administration, at the request of Secretary Gates, said he'd veto the
bill if that happened. So it does seem to me a little odd to quote the
Secretary of Defense and the Admiral, the Chairman of the Joint Chiefs
of Staff, about the problems of debt and then vote for money over their
objection.
So those are things I would do. Brazilian cotton farmers, I would
have limited the amount that we pay others.
There's a couple of other major flaws here. We've heard several times
from people on the majority side that more people are hurt than helped
by HAMP. That appears nowhere in anybody's testimony. Neil Barofsky
didn't say it. La Raza didn't say it. They said some people are hurt.
I will yield if the gentleman wants to point to any document that
says more people were hurt than helped.
Mr. McHENRY. I thank the gentleman for yielding.
There are 800,000 people that are given temporary modifications,
verbal modifications, that are kicked out of the program. Those are the
people that have their credit dinged and----
Mr. FRANK of Massachusetts. Reclaiming my time, the gentleman quoted
Barofsky, quoted La Raza. Those figures are nowhere in there. And their
credit is not worse off because they're in the program. That's the
fundamental flaw. What they are saying is--and people have said, the
gentlewoman from Illinois--go to the private sector.
The problem, by the way, that La Raza has is this is too much private
sector. La Raza's problem here is that the problem is that it leaves
too much to the private sector. The private sector does the easy stuff.
The notion that
[[Page H2001]]
more people are hurt than helped is simply nonexistent.
By the way, we've always heard from my Republican friends that we
shouldn't be the nanny state, to let people make choices. No one is
forced to go into this program. If they can go into another program,
they can make it better.
The final point I want to make is this. Yes, there is a question
about who pays for it. Under the TARP bill that we passed, it is
mandated that in 2013 we get money from the financial institutions for
this. In the financial reform bill that passed the House, we had a
provision that required that that assessment be made right away. In the
conference report on financial reform, we had an assessment on the
financial institutions, those above $50 billion in assets, except hedge
funds above $10 billion. We have had three legislative efforts to
assess these costs on the financial institutions. The Republicans have
opposed every one, unfortunately, with some success; although, we still
have one left.
The final point I would make is this. Yes, the HAMP program has a lot
of problems. Solutions cannot be more elegant than the problems they
seek to resolve. The absence of any program leaves people worse off.
The Republicans successfully defeated efforts to give bankruptcy
powers. They have successfully opposed efforts to make the banks pay
for this. So they set up a program which, thanks to them, at least for
now, looks like it comes from the taxpayers--although we'll be able to
recover that money--which has no leverage over the private sector, and
then they object to it.
So I would say again, Mr. Chairman, look at the votes on subsidizing
Brazilian cotton farmers or a second engine or money for infrastructure
in Afghanistan or security in Iraq. Billions of dollars collectively in
all those programs, which my Republican friends, including the
advocates on the other side of killing this program, voted for. We have
a program here that will be paid for by assessments on the large
financial institutions if the Republicans aren't successful and once
again go to their rescue. It is a program that people go to
voluntarily. They have a right to go purely to a private sector
program. If that doesn't work, they can go in here.
It has not helped everybody. The fact that some people didn't get a
modification here I regret, and I wish we'd give them more power, but
it doesn't mean they are worse off. A few are worse off. Nobody quoted
and said a majority were worse off. I hope the program is continued.
Mrs. BIGGERT. I yield the remainder of my time to the gentleman from
North Carolina (Mr. McHenry).
Mr. McHENRY. I appreciate my colleague yielding, and I certainly
appreciate the rhetoric used on the floor. I respect my colleagues. I
respect their opinion.
I think people of good will created this program; I really do. The
intent was to help homeowners. But 2 years after the fact, we're left
with the cold, hard facts that this program has hurt more people than
it's helped: a Federal Government program that brings people in,
destroys their credit, takes their savings, and at the end of the day
takes their home. It offers hope, but it isn't able to deliver it. It's
false hope that this program delivers.
I would point to the Special Inspector General's report from January
26, 2011. On page 11: A combined total of more than 792,000 trial and
permanent modifications have been canceled.
I would also point my colleague to the Treasury Department's monthly
report on their housing programs.
{time} 1530
Of the trial modifications that are canceled, those are the
individuals who are brought in, given verbal modifications, and strung
out for a period of months, some for 3, 6 months. I've had constituents
tell me they've been in this trial modification period for up to a
year. At the end of the day, these people are kicked out after their
savings have been taken, and they're left with nothing, not even their
homes, not their credit ratings, not their savings.
It's a Federal Government program that's doing this. This is so
objectionable at its core, and I have my colleagues on the other side
of the aisle saying that they're bleeding heart liberals--right?--and
they're making their arguments. Well, let me see if this actually burns
your bleeding hearts.
A constituent of mine from Kings Mountain says, ``They keep
requesting the same information over and over again. They have
supposedly been working with me to get approved under the Make Home
Affordable Modification for over 14 months now. The person handling my
case returned my call to tell me that they've declined my request for a
modification because I was unemployed. I've never been unemployed. I've
been with the same employer for over 5 years now, and that has not
changed through this whole process. After sending her the proof of my
income, she now says that I do not qualify because I am so behind on my
payments. I would not be behind on my payments if they would have let
me continue to pay them.''
Can you believe this is a Federal program? If that doesn't tear at
your heart, if you don't see the tears of your constituents who have
been put through the wringer of this Federal program--this Federal
program--then I would say that every program must be acceptable then no
matter how much harm it's doing.
I know that we're better than that. I think the folks on the left and
the right who have analyzed this program, who have done a bipartisan,
nonpartisan analysis of this and research, have shown that it has been
a failure. It is this Congress' responsibility to end a failure of a
program and to make sure that the Federal taxpayers, the American
people, don't continue to write the check for a program that destroys
people's lives and that has hurt more people than it has helped.
I encourage my colleagues to vote ``yes'' on this bill.
Mr. TOWNS. Mr. Chair, I rise today to urge my colleagues to vote no
on H.R. 839 ``The HAMP Termination Act of 2011''. This bill would
prohibit new mortgage loan modifications under the Home Affordable
Modification Program (HAMP) which has assisted over 600,000 people. The
program works with loan servicers and borrowers to allow hard working
people to stay in their homes.
Mr. Chair, my home state of New York has over 140,000 households with
at least one member of that household out of work. We must invest in
programs that give relief to families that have lost income in this
great recession through no fault of their own. HAMP entitles qualified
homeowners to reduced mortgage payments at a sustainable debt to income
ratio of 31 percent. This program also provides incentives to loan
investors and servicers for every permanent loan modification. These
incentives allow homeowners in distress the ability to stay in their
homes and to continue making payments on time.
I realize that this program is not perfect and that there are still
some outstanding issues that must be addressed in order to make HAMP
more efficient and effective. However H.R. 839 would simply prevent any
future attempt by this congress to address those concerns. Mr. Chair,
we were sent to Congress to solve problems. We must deal with the
current foreclosure crisis by using every tool in our arsenal to make
sure people can afford to stay in their homes.
It is my hope that Members of Congress from both sides of the aisle
will work together to make sure the American dream of homeownership is
viable in 2011. We must work together to solve the major challenges of
our day and we must do so in a bipartisan manner.
H.R. 839 is not the answer to our nation's foreclosure crisis. I urge
my colleagues to vote no on this measure.
Ms. HIRONO. Mr. Chair, I rise in strong opposition to H.R. 839, the
Home Affordable Modification Program (HAMP) Termination Act.
The House majority supports H.R. 839 and other bills that would end
new and existing foreclosure mitigation programs, turning their backs
on the middle class families in our country.
Instead of coming up with practical ways to improve these programs,
or establishing new initiatives that assist homeowners and stabilize
the housing market, my colleagues on the other side of the aisle
support immediate termination of these programs without working to
address the housing crisis and its effect on the nation's economy.
Most of us would agree that HAMP has not been nearly as successful as
initially hoped. Since this program started, about 5 million
foreclosures have been completed. HAMP is far from reaching the
targeted goal of assisting 3 to 4 million homeowners: nearly 1.5
million homeowners have received a trial HAMP
[[Page H2002]]
modification, but only about 600,000 have had their mortgages
permanently modified under HAMP.
On March 28th, fifty of my colleagues and I sent a letter to Treasury
Secretary Geithner to share our concerns about HAMP, including (1)
establishing a single point of contact requirement for mortgage
servicers; (2) suspending the foreclosure process when the borrower
makes a request for a loan modification; (3) providing for an
independent review of loan modification denials; and (4) urging the
Treasury Department to begin levying fines and penalties against
servicers who fail to follow program rules. These reforms are essential
to ensure that HAMP becomes a more successful and effective program.
While HAMP has been far from perfect, the program has had its share
of successes. About 30,000 additional homeowners are receiving a
permanent HAMP modification every month.
Moreover, the Office of the Comptroller of the Currency reports that
the re-default rate for the program's permanent modifications at six
months was about half that of other modifications, and nearly 85
percent of homeowners who received a permanent HAMP modification remain
in their modification a year later. This program has also set important
mortgage industry standards to address the magnitude of this housing
crisis and ensure that struggling homeowners get the help that they
need to stay in their homes.
If it were not for HAMP, there is no question that even more homes in
my congressional district would have been subject to foreclosure. A
constituent from Hilo on the island of Hawaii contacted me desperate
for assistance. At 72 years old, he has a medical condition and lives
on a fixed income. This constituent has no substantial debt and put in
over $300,000 of his savings into his home. His bank ignored his pleas
for help, and he was on track to getting a foreclosure notice until he
received assistance from HAMP.
Another constituent, a disabled veteran living in Volcano on the
island of Hawaii, tried for over two years to get help from her lender,
to no avail. It was only as a result of the Making Home Affordable
foreclosure prevention services that she was able to get a permanent
loan modification, which saved her $500 a month and lowered her
interest rate by over two percentage points.
These are only two of the personal and heart-wrenching stories that
I've heard from people in my congressional district who are struggling
to stay in their homes. The bottom line is that HAMP provides yet
another lifeline for these families. Terminating HAMP would effectively
end a lifeline to tens of thousands of homeowners.
I urge my colleagues to vote against this misguided bill.
Mr. POSEY. Mr. Chair, I rise today in support of H.R. 839, the HAMP
Termination Act.
As you know, this bill would terminate the failed Home Affordable
Modification Program (HAMP), while still protecting assistance for
homeowners who were already extended an offer to participate in the
program. If passed, it would save taxpayers $1.4 billion.
HAMP was established under the Troubled Assets Relief Program (TARP)
and was aimed at helping homeowners modify their loans. The
Administration rolled out HAMP with the goal of assisting three to four
million homeowners, yet the program has fallen far short of that goal,
assisting only 500,000 borrowers and at a cost much higher than
anticipated. In fact, this program is hurting more homeowners than it
is helping. Many trial modifications ultimately end up being
cancelled--putting borrowers in a worse financial position than they
were before they applied for HAMP assistance. Too many found HAMP to be
less than helpful, and ended up owing back payments, interest, and fees
in one lump sum once their modification request is rejected.
Numerous government watchdogs--including the Government
Accountability Office, the Special Inspector General for TARP, and the
Congressional Oversight Panel--are all on record labeling HAMP as
ineffective. Unfortunately, as I've witnessed in Financial Services
Committee hearings and on the House floor, the Administration has been
unwilling to accept these objective analyses and terminate the program,
instead choosing to throw good money after bad.
I believe when we see valuable tax dollars being spent on a flawed
program we must terminate those programs. A dollar saved here is one
less dollar borrowed and put on the tab of future generations.
Washington is on an unsustainable path. Out-of-control government
spending has caused a massive increase in borrowing and the national
debt is now a record $14 trillion. Facing a $1.5 trillion deficit for
the third year in a row, the time is past due for Washington to make
tough decisions so that our nation's financial future will be secure.
All across America, families are doing more with less, and it is time
for Washington to do likewise. Fiscally responsible Americans know the
budgetary challenges we face and are supportive of the steps we are
taking to stop the waste.
Mr. Chair and my colleagues, I ask that you join me in support of
H.R. 839, the HAMP Termination Act. Together, let's stand with the
American people and get Washington's spending spree under control.
Mr. VAN HOLLEN. Mr. Chair, today's bill represents the fourth piece
of legislation we have considered in as many weeks to withdraw
assistance from struggling homeowners, worsen the foreclosure crisis
and further weaken the middle class.
Specifically, H.R. 839 proposes to terminate the Home Affordable
Modification Program, or HAMP. HAMP is a voluntary program with strict
and sensible guidelines that has already provided permanent loan
modifications to 600,000 American households, including over 17,000 in
my home state of Maryland--and is expected to help another 30,000
Americans stay in their homes every month through the end of next year.
Furthermore, HAMP's standards have now been largely adopted and
standardized across the mortgage industry, thereby benefiting millions
of additional homeowners outside the program itself.
HAMP is not a silver bullet, and it will not help everyone. For
example, it is not available for mortgages over $729,750, for second
homes, for investment properties or for vacant houses. Additionally,
HAMP is not for homeowners who can afford to pay their mortgages
without government assistance--or for homeowners who could not afford
to pay their mortgages even with government assistance. But for the
estimated 1.4 million Americans who are eligible for the program, HAMP
is a lifeline that can make all the difference.
Mr. Chair, as we struggle to pull ourselves out of the worst economic
downturn since the Great Depression, it makes little sense to terminate
a targeted and effective foreclosure prevention program like HAMP when
so many of our fellow Americans still face completely avoidable
foreclosure.
I urge a no vote.
Mr. BACA. Mr. Chair, I rise in opposition to H.R. 839--the HAMP
Termination Act.
HAMP is far from perfect--and we all are aware of some of the
problems it has experienced since it began.
But it has helped over 500 thousand homeowners gain mortgage
modifications.
And--it is expected to help another 500 thousand homeowners gain
modifications over the next two years.
These modifications have resulted in real savings for American
families.
In fact--the median savings for homeowners who have received a
modification is $537 a month.
I know much has been made by my friends on the other side, about how
some advocacy organizations--like NCLR--support the termination of
HAMP.
I understand the frustration of these groups. HAMP is a voluntary
program. Treasury could have pushed our financial regulators harder to
comply with standards. And--we have yet to see a comprehensive plan to
punish the bad actors.
But terminating HAMP--without any alternative plans to assist
struggling homeowners--is wrong.
Unfortunately, Republicans are eager to turn control of loan
modifications over to the same banks who got us in this mess to begin
with.
Before HAMP, homeowners who were lucky enough to get a modification
would often pay more per month.
Now--we have standardized the modification market, and are expanding
HAMP's reach.
Make no mistake--HAMP is not perfect.
But it does give us a framework to build from.
And doing nothing is not a viable alternative.
I urge my colleagues to oppose this effort to deny mortgage
assistance to over a half a million Americans.
Vote no on H.R. 839.
Mr. TURNER. Mr. Chair, I rise today in support of H.R. 839, the HAMP
Termination Act. The foreclosure crisis facing our nation is far from
over. Families across the nation who face the threat of losing their
homes need help they can count on and hope for a better future.
Unfortunately, the Home Affordable Modification Program, better known
as HAMP, has failed to deliver on both counts.
According to The New York Times, in 2010 Fannie Mae and Freddie Mac
took over a foreclosed home approximately every 90 seconds. By the end
of December, they owned 234,582 homes. They spend 10 million dollars in
just one month to have the lawn of each home mowed twice!
To try and help those who are suffering most, both the Bush and Obama
Administrations created programs to help families who are at risk of
losing their homes. One of these programs was the Home Affordable
Modification Program which we will end with the enactment of the bill
before us today.
In the face of such a large crisis it is our responsibility to
terminate programs that falsely
[[Page H2003]]
raised the hopes of so many, but were poorly designed and help only a
very few. While the administration has allocated $75 billion for HAMP,
it failed to perform under any honest observation.
When the Administration announced the program they estimated it would
help between three and four million homeowners. As of December 2010,
only 521,630 HAMP modifications have been made permanent. I am
concerned that for every one of these success stories there are so many
more that have been kicked out of the program, since nearly 800,000
modifications have been canceled since the start of the program.
Temporary modifications offer little help to homeowners who do not
receive permanent ones, and they end up losing their homes anyway. In
addition, the Treasury Department reports that about 20 percent of the
borrowers who had their modifications made permanent are now 60 days or
more behind on their mortgages.
Why would a program that was designed to help so many homeowners fall
so short? Perhaps it's because the program was not designed to help
homeowners facing foreclosure. On June 22, 2010, Secretary Geithner
testified before the TARP Oversight Panel regarding HAMP and stated
``This program was not designed to prevent foreclosures.''
Programs that were not designed to help families keep their homes
deserve termination. Programs that kick many more qualifying families
out of the program than are assisted by the program deserve
termination. Programs that have such a high redefault rate among the
families that are helped by the program are fundamentally flawed and
deserve termination.
I ask my colleagues to join me in supporting this bill to terminate a
program that has fallen so short of its laudable goals.
Ms. BROWN of Florida. Mr. Chair, I rise today to oppose this spurious
legislation to eliminate a program that has just begun to help our
constituents recover from the horrible housing crisis that has taken
hold of our communities.
This program has helped more than 600,000 families stay in their
homes while helping neighborhoods avoid the associated blight that
comes with vacant and foreclosed homes.
The legislation allowed hard-working American families in danger of
losing their homes to refinance into lower-cost government-insured
mortgages they can afford to repay.
Florida has had over 82,000 permanent and trial modifications under
this program. This is over 82,000 families who do not have to worry
about where they are going to sleep tomorrow. 82,000 families who know
where their kids are going to go to school tomorrow.
I was able to hold foreclosure workshops in cities and towns
throughout my district to help these families at risk of losing their
homes. With this program's help, these families were able to stay in
their homes, keeping neighborhoods intact.
I believe that more money should be used to keep people in their
homes. To the administration's credit, they attempted to create other
programs that would do that. The Republican majority has spent the last
weeks attempting to eliminate those programs also.
Eliminating this program without a replacement program for the people
on the front lines of this recession is heartless and should be
criminal.
Defeat this legislation and vote to keep people in their homes and
our communities living and vibrant.
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 and shall be considered
read.
The text of the amendment in the nature of a substitute is as
follows:
H.R. 839
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 ``The HAMP Termination Act of
2011''.
SEC. 2. TERMINATION OF AUTHORITY.
Section 120 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5230) is amended by adding at the end the
following new subsection:
``(c) Termination of Authority To Provide New Assistance
Under the Home Affordable Modification Program.--
``(1) In general.--Except as provided under paragraph (2),
after the date of the enactment of this subsection the
Secretary may not provide any assistance under the Home
Affordable Modification Program under the Making Home
Affordable initiative of the Secretary, authorized under this
Act, on behalf of any homeowner.
``(2) Protection of existing obligations on behalf of
homeowners already extended an offer to participate in the
program.--Paragraph (1) shall not apply with respect to
assistance provided on behalf of a homeowner who, before the
date of the enactment of this subsection, was extended an
offer to participate in the Home Affordable Modification
Program on a trial or permanent basis.
``(3) Study of use of program by members of the armed
forces, veterans, and gold star recipients.--
``(A) Study.--The Secretary shall conduct a study to
determine the extent of usage of the Home Affordable
Modification Program by, and the impact of such Program on,
covered homeowners.
``(B) Report.--Not later than the expiration of the 90-day
period beginning on the date of the enactment of this
subsection, the Secretary shall submit to the Congress a
report setting forth the results of the study under paragraph
(1) and identifying best practices, derived from studying the
Home Affordable Modification Program, that could be applied
to existing mortgage assistance programs available to covered
homeowners.
``(C) Covered homeowner.--For purposes of this subsection,
the term `covered homeowner' means a homeowner who is--
``(i) a member of the Armed Forces of the United States on
active duty or the spouse or parent of such a member;
``(ii) a veteran, as such term is defined in section 101 of
title 38, United States Code; or
``(iii) 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.
``(4) Publication of member availability for assistance.--
Not later than 5 days after the date of the enactment of this
subsection, the Secretary of the Treasury shall publish to
its Website on the World Wide Web in a prominent location,
large point font, and boldface type the following statement:
`The Home Affordable Modification Program (HAMP) has been
terminated. If you are having trouble paying your mortgage
and need help contacting your lender or servicer for purposes
of negotiating or acquiring a loan modification, please
contact your Member of Congress to assist you in contacting
your lender or servicer for the purpose of negotiating or
acquiring a loan modification.'.''.
The CHAIR. No amendment to the committee amendment is in order except
those printed in part A of House Report 112-34. Each such amendment may
be offered only in the order printed in the report, by a Member
designated in the report, shall be considered read, shall be debatable
for the time specified in the report equally divided and controlled by
the proponent and an opponent, shall not be subject to amendment, and
shall not be subject to a demand for division of the question.
Amendment No. 1 Offered by Mr. Hanna
The CHAIR. It is now in order to consider amendment No. 1 printed in
part A of House Report 112-34.
Mr. HANNA. 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:
Page 4, after line 6, insert the following new section (and
redesignate the succeeding sections accordingly):
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) According to the Department of the Treasury--
(A) the Home Affordable Modification Program (HAMP) is
designed to ``help as many as 3 to 4 million financially
struggling homeowners avoid foreclosure by modifying loans to
a level that is affordable for borrowers now and sustainable
over the long term''; and
(B) as of February 2011, only 607,600 active permanent
mortgage modifications were made under HAMP.
(2) Many homeowners whose HAMP modifications were canceled
suffered because they made futile payments and some of those
homeowners were even forced into foreclosure.
(3) The Special Inspector General for TARP reported that
HAMP ``benefits only a small portion of distressed
homeowners, offers others little more than false hope, and in
certain cases causes more harm than good''.
(4) Approximately $30 billion was obligated by the
Department of the Treasury to HAMP, however, approximately
only $840 million has been disbursed.
(5) Terminating HAMP would save American taxpayers
approximately $1.4 billion, according to the Congressional
Budget Office.
The CHAIR. Pursuant to House Resolution 170, the gentleman from New
York (Mr. Hanna) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from New York.
Mr. HANNA. Mr. Chairman, this amendment would add a findings section
detailing the flaws of the Home Affordable Modification Program, or
HAMP. It would also state that terminating HAMP would result in
significant savings for the American taxpayers.
[[Page H2004]]
I filed this amendment during Sunshine Week, which highlights the
importance of open government. In keeping with the spirit of
transparency, this amendment would include within the bill the specific
reasons why we should end the failed HAMP program.
The HAMP program was designed to assist between 3 and 4 million
homeowners. However, as of February, only 607,000 active permanent
mortgage modifications were made under HAMP. While $30 billion was
obligated by the Treasury to HAMP, only $1.04 billion has been
disbursed. Furthermore, the Special Inspector General for TARP reported
that HAMP offers many homeowners ``little more than false hope and in
certain cases causes more harm than good.'' The program does not
fulfill its intended purpose of helping American homeowners. It delays
rather than prevents foreclosure.
This program was flawed from the beginning. According to The Wall
Street Journal, the number of applications canceled far exceeds those
that were approved, and the number of applications continues to slow. I
agree with the Journal's assessment, which also pointed out that
keeping people in homes they cannot afford is bad policy. Incentivizing
mortgage servicers to do just that only exacerbates our housing crisis.
Moreover, the private sector is better equipped to deal with the
problem, and they have modified nearly double the number of loans
themselves without government involvement.
My amendment concludes that ending this ineffective program would
save taxpayers $1.4 billion, which is according to the Congressional
Budget Office. This is one step toward restoring fiscal discipline to
our Federal Government.
Too often, our constituents receive biased or incomplete information
on the issues we are discussing in Congress, thus making it difficult
for them to make informed assessments of our work. Including additional
facts on the intended consequences of legislation is beneficial to the
public. That is why I urge support for the Hanna amendment and the
underlying bill.
I yield back the balance of my time.
Mr. ELLISON. Mr. Chairman, I rise in opposition to the amendment.
The CHAIR. The gentleman from Minnesota is recognized for 5 minutes.
Mr. ELLISON. I rise in opposition to the gentleman from New York's
amendment and in opposition to the underlying bill today.
Mr. Chairman, the middle class is shrinking, and deficits are rising
because Republicans are giving a pass to special interests who cheated
American homeowners and wrecked our economy. This is the 13th week of
the Republican-controlled Congress. Republicans continue to ignore the
people's top priority, which is jobs. Instead of working to keep middle
class families in their homes, the Republican plan is to foreclose on
the American middle class. The American people sent us here to protect
the dream, not to destroy it, not to perpetuate a Wall Street
nightmare. Democrats are standing with the American people to create
good-paying American jobs and to keep Americans in their homes.
This legislation is just the latest attempt by the Republican
majority to end foreclosure programs to help middle class Americans.
The majority's housing plan is very simple: foreclose on the middle
class. Now that millions of families have already lost their homes,
their plan is to hand out foreclosure notices to everybody else.
What's the Republican answer if you lose your home to foreclosure? So
be it. What's the Republican answer if your neighbors lose their homes?
So be it. What's the Republican answer if you lose your job? So be it.
Mr. Chair, I would like to yield 20 seconds to the gentleman from New
York for a question. I am offering the gentleman 20 seconds because I
want to ask him a question.
Does the gentleman want to answer the question?
Mrs. BIGGERT. The gentleman is not here.
Mr. ELLISON. How many jobs does this amendment create?
Mrs. BIGGERT. This legislation is to reiterate what the Congressional
Budget Office says about----
Mr. ELLISON. Reclaiming my time, the gentlelady hasn't told me the
jobs that this amendment, this bill, is going to create.
Mr. McHENRY. Will the gentleman yield?
Mr. ELLISON. I yield to the gentleman from North Carolina.
How many jobs is this amendment going to create or is this bill going
to create?
Mr. McHENRY. Certainly, a multibillion-dollar Federal program doesn't
create any real private sector jobs.
Mr. ELLISON. I reclaim my time.
``No jobs'' is the answer from the gentleman from North Carolina. I
appreciate his candor.
Mr. McHENRY. Will the gentleman yield?
Mr. ELLISON. Let me just finish here.
Mr. McHENRY. If the gentleman would yield, I would be happy to
explain.
The CHAIR. The gentleman from Minnesota controls the time.
Mr. ELLISON. We are here for the specific purpose of trying to create
some jobs and to help the American people create their own dreams.
That's about jobs. We've been here 13 weeks, and the majority caucus,
Mr. Chair, hasn't created one single job.
I asked the gentleman from North Carolina how many jobs this bill is
creating, and he just went off on a tangent somewhere. Now, I'm looking
for some kind of a number. I'll even take an estimate.
How many jobs does this bill create?
I yield to the gentleman.
Mr. McHENRY. When you cut Federal spending, you create private sector
jobs. When you tax people more, you get less private sector growth.
Mr. ELLISON. I reclaim my time.
Look, we are supposed to be creating jobs around here, Mr. Chair, and
we're not creating anything.
{time} 1540
The fact is we get spin and we get imaginary arguments and we get
failed and flawed economic theory but no answer to the fundamental
question, which is, when are the jobs going to start arriving around
here?
Mr. Chair, it is a pretty simple question: How many jobs does this
bill create? How many families will this bill help keep in their homes?
In fact, Mr. Chair, I have three major studies here with me today which
I would like to enter into the Record which state very clearly that the
Republican spending bill eliminates nearly 1 million jobs. The Economic
Policy Institute study shows that the Republican spending bill, H.R. 1,
will cut nearly 1 million American jobs. Mark Zandi of Moody's
Analytics said that the Republican spending bill will cut 1 million
jobs. A report from Goldman Sachs says that the Republican spending
bill will cut nearly 1 million jobs.
Why is the Republican majority against jobs? Why won't they take a
moment to do something about jobs?
[From the Economic Policy Institute, Feb. 9, 2011]
Republican Proposal to `Right Our Fiscal Ship' Throws More Workers
Overboard
(By Rebecca Thiess)
Update: Since this piece was posted last week, the
magnitude of discretionary funding cuts for the duration of
this fiscal year proposed by House Republican leadership has
grown substantially, especially considering the short time
frame for implementation. After the House Appropriations
Committee detailed $74 billion in cuts last Wednesday, a
number of conservative members demanded $26 billion in
additional cuts to make good on the ``Pledge to America,''
bringing the total level of cuts relative to President
Obama's FY 2011 budget request to $100 billion. A full $100
billion cut to discretionary spending would likely result in
job losses on the order of 994,000, using OMB's GDP
projections (CBO's projections are based on current law) and
assuming a fiscal multiplier of 1.5.
The new GOP budget proposes cutting non-security
discretionary spending by $81 billion relative to the
president's $478 billion request for 2011. Non-security
discretionary cuts of this magnitude would likely result in
job losses of just over 800,000. (2/15/2011)
____
Today the Republican-led House Appropriations Committee
released a list of 70 proposed funding cuts to government
operations for the rest of fiscal year 2011. The cuts
included in the committee's proposal are extensive in both
their depth and reach. In total, House Republicans propose
funding the government at a level $74 billion below President
Obama's FY 2011 budget request. Of that cut, $58 billion
(over three-quarters) would apply to non-security
discretionary spending.
Included on the chopping block are a $224 million cut to
Amtrak, a $256 million cut in assistance to state and local
law enforcement, an $889 million cut for energy efficiency
and renewable energy programs, a $1
[[Page H2005]]
billion cut to the National Institute for Health, a $1.3
billion cut to community health centers, and a $1.6 billion
cut to the Environmental Protection Agency. All cuts can be
seen proportionally, below:
Cuts of this magnitude will undermine gross domestic
product performance at a time when the economy is seeing
anemic post-recession growth. Cuts in the range of $74
billion will lead to the loss of roughly 700,000 jobs. The
domestic discretionary reduction of $58 billion will result
in the loss of around 590,000 jobs, as we demonstrate in this
briefing paper.
Like Paul Ryan's budget outline, as we stress in this
related piece, the proposal suggests Americans take on
unnecessary pain with no long-term gain. While $58 billion
represents a 12% reduction to the nonsecurity discretionary
budget, it only represents 4% of the total 2011 deficit, and
less than 2% of total spending as projected by the
Congressional Budget Office. In other words, changes to the
short-term budget picture would be inconsequential at best,
and there would be practically no benefit at all regarding
the longer-term budget trajectory. Meanwhile, associated job
losses would certainly magnify the ongoing labor market
crisis, which has now experienced 21 straight months of
unemployment over 9%.
Appropriations Committee chairman Hal Rogers has stated
that he has a unique opportunity to ``right our fiscal
ship.'' In reality, the nonsecurity discretionary budget is
not adding to our long-term debt instability. If anything,
the GOP efforts to extend tax cuts for the wealthiest 2% of
Americans and water down the estate tax have made our fiscal
ship a leakier vessel (according to the Center on Budget and
Policy Priorities, these tax policies will have a two-year
deficit impact of $139 billion). The proposed program cuts
not only fail to offset that lost tax revenue, but they also
target programs that exist to promote innovation, global
competitiveness, and community and safety-net services. This
is an effort to cut helpful and innovative programs and
services traditionally opposed by conservatives, disguised as
an effort to promote fiscal responsibility. It would reduce
jobs, it would hurt millions of people, and it would barely
dent our long-term budget picture.
____
[From Moody's Analytics, Feb. 28, 2011]
A Federal Shutdown Could Derail the Recovery
(By Mark Zandi)
Odds are uncomfortably high that the federal budget impasse
will prompt a government shutdown.
The Obama administration has shown significant spending
restraint in its recent budget, but House Republicans want
deeper cuts.
While cuts and tax increases are necessary to address the
nation's long-term fiscal problems, cutting too deeply before
the economy is in full expansion would add unnecessary risk.
The House Republicans' proposal would reduce 2011 real GDP
growth by 0.5% and 2012 growth by 0.2 percentage points. This
would mean some 400,000 fewer jobs created by the end of 2011
and 700,000 fewer jobs by the end of 2012.
A government shutdown lasting longer than a couple of
weeks would do much more damage to the economy.
Lawmakers are likely to split the difference between the
administration and House Republican proposals. This isn't
ideal fiscal policy, but the economy will be able to manage
through it.
A compromise could send an encouraging signal about the
more serious budget battles to come.
The political war is intensifying over the federal budget.
Lawmakers are at loggerheads over how to cut government
spending, raising prospects that government services will
halt temporarily while the debate is resolved. Significant
government spending restraint is vital, but given the
economy's halting recovery, it would be counterproductive for
that restraint to begin until the U.S. is creating enough
jobs to lower the unemployment rate. Shutting the government
for long would put the recovery at risk, not only because of
the disruption to public services but also because of the
potential damage to consumer, business and investor
confidence.
The near-term fight over funding
Washington's most immediate battle is over near-term
government spending. The catalyst is the chance of a federal
shutdown March 4, when current funding will run out. The
Obama administration's recently unveiled budget plan calls
for significant spending restraint through the remainder of
this fiscal year, but House Republicans want even greater
cuts. Their proposal would cut spending by about $100 billion
more than in the administration's plan and would put spending
$60 billion below fiscal 2010 levels.
It is laudable that policymakers are focused on reining in
government spending. Much greater cuts will be needed, along
with tax increases, to address the nation's daunting long-
term fiscal challenges. Even under the most optimistic
assumptions, the current fiscal year's deficit will exceed
$1.3 trillion, equal to 9% of GDP. If the economy continues
to improve as anticipated, and there are no significant
policy changes, the deficit will shrink over the next few
years, settling around a level equal to 5% of GDP. This is
the so-called structural budget deficit. Left alone, it will
cause interest payments on the nation's debt to balloon,
producing a fiscal crisis. Policymakers will eventually need
to cut annual spending and/or raise taxes to shrink the
deficit by $400 billion, bringing it down to a sustainable
level at no more than 2.5% of GDP.
Too much cutting too soon
While long-term government spending restraint is vital, and
laying out a credible path toward that restraint very
desirable, too much cutting too soon would be
counterproductive. The economy is much improved and should
continue to gain traction, but the coast is not clear; it
won't be until businesses begin hiring aggressively enough to
meaningfully lower the still-high unemployment rate. The
economy is adding between 100,000 and 150,000 per month--but
it must add closer to 200,000 jobs per month before we can
say the economy is truly expanding again. Imposing additional
government spending cuts before this has happened, as House
Republicans want, would be taking an unnecessary chance with
the recovery.
This is particularly true given the added threat presented
by rising oil prices. Unrest in the Middle East has pushed up
the price of crude oil by about $10 per barrel; West Texas
Intermediate is selling for almost $100 per barrel, and a
gallon of regular unleaded gasoline has risen to about $3.25
nationwide. If sustained, these prices will shave about 0.2%
from real GDP growth in 2011, a disappointing but manageable
outcome. If oil prices approach $125 barrel, and gasoline
reaches $4 per gallon, growth will slow sharply and
unemployment will begin rising again. Should fuel prices
return to their all-time high near $150 per barrel for oil
and $4.50 per gallon for gasoline, the economy would sink
back into recession. Such a price spike seems unlikely, but
handicapping events in the Middle East with any precision is
practically impossible.
Policy at odds with itself
Additional spending cuts would also be at cross-purposes
with the government's other economic policies. The Federal
Reserve is holding short-term interest rates close to zero
and purchasing hundreds of billions of dollars in long-term
Treasury bonds, in an effort to hold down long-term interest
rates. The Fed's credit-easing efforts are scheduled to
continue through June, and the central bank is likely keep
interest rates near zero through 2011. Monetary authorities
clearly remain nervous about the economy's near-term
prospects.
The tax cuts and benefit extensions lawmakers agreed to
late in 2010 are also providing substantial temporary support
to the economy. In addition to extending marginal personal
tax rates for two years, the deal provided for a 2% payroll
tax holiday in 2011, an extension of emergency unemployment
insurance benefits through the end of the year, and--perhaps
least appreciated in terms of its economic impact--the
expensing of all business investment this year. The deal
ensured that fiscal policy, which would have significantly
weighed on the economy in 2011, will be largely neutral
instead. Fiscal restraint was appropriately put off until
2012, when the expansion is likely to be in full swing.
While the government spending cuts proposed by House
Republicans for this fiscal year mean only modest fiscal
restraint, this restraint is meaningful. If fully adopted,
the cuts would shave almost half a percentage point from real
GDP growth in 2011 and another 0.2 percentage point in 2012.
There would be almost 400,000 fewer U.S. jobs by the end of
2011 than without the cuts and some 700,000 fewer jobs by the
end of 2012. The fallout will extend into next year because
it takes time for budget cuts to filter through the economy.
In all likelihood, the proposed House cuts would not
undermine the current recovery; still, it is not necessary to
take the chance.
No crowding out yet
This wouldn't be true if the current budget deficits were
crowding out private investment, but they aren't. Business
demand for credit has recovered modestly, and households
continue to lower their debt obligations. Interest rates also
remain extraordinarily low. Some of this is due to the Fed's
credit easing, but global investors also remain willing
buyers of U.S. debt even at low interest rates. Ten-year
Treasury bonds are yielding 3.5%, fixed mortgage rates are
near 5%, and borrowing costs for below-investment grade, or
``junk'', corporate bonds are 8%--about as low as they have
ever been. Global investors won't remain avid buyers of U.S.
debt for long if policymakers don't tackle the nation's long-
term fiscal problems; yet markets today appear unconcerned
about the near-term deficits.
This could change if policymakers remain deadlocked and the
government suffers a prolonged shutdown. The 1995-1996
experience suggests that a brief shutdown need not be
disruptive; in those years, nonessential functions of the
government were stopped briefly twice after the Clinton
administration and the Newt Gingrich-led House reached an
impasse. By that measure, a week-long shutdown in mid-March
of 2011 would cost the economy about 0.2% in annualized real
growth in the first quarter. Growth would rebound in the
second quarter, and there would be no discernible impact by
year's end.
A shutdown that lasted into April would be a problem,
however. Not only would this disrupt a wide range of
government operations and significantly cut the output of
government workers, but the hit to confidence
[[Page H2006]]
could be serious. Consumer, business and investor sentiment
is much improved from the depths of the recession, but it
remains extraordinarily fragile. A government shutdown
lasting more than a week or two could easily undermine
confidence as questions grow about policymakers' ability to
govern. This would be fodder for a new recession.
Hitting the debt ceiling
Even more disconcerting would be a shutdown emerging from
an impasse about the federal debt ceiling. Judging from the
Treasury's near-term financing needs, the current debt
ceiling will become a binding constraint on government
operations no later than June. The longer it takes Congress
to raise the ceiling, the greater the fallout on financial
markets and the economy. Global investors who own Treasury
debt will receive their interest and principal payments, but,
the spectacle of legislative gridlock on this issue may
convince markets that U.S. policymakers will have even more
trouble making hard future policy choices. Interest rates
could spike, stock prices and the value of the U.S. dollar
could fall, and the economy would suffer severe harm.
While these dark scenarios highlight the threat of a
serious policy misstep in the next several weeks, the very
seriousness of the threat improves chances that policymakers
will come to terms. The most likely scenario is thus a
political compromise that roughly splits the difference
between the administration and House Republican proposals,
with spending cuts in fiscal 2011 of closer to $30 billion.
This isn't ideal fiscal policy, but the economy will be
able to manage through it. And if the compromise is reached
relatively gracefully, it could send an encouraging signal
that policymakers can navigate the much more difficult budget
battles still to come.
____
Goldman Sachs
(By Alec Phillips)
Proposals to cut federal spending, the possibility of a
government shutdown, and the escalated debate over state
employee compensation has increased interest in the effect of
fiscal policy on growth, after last year's fiscal package
briefly neutralized the expected drag from federal fiscal
policy.
Federal spending cuts deserve the most attention. They are
the most likely of these issues to occur, and could have the
largest magnitude. The assumption we incorporated into our
recently revised budget estimates--discretionary spending
cuts of $25bn and $50bn below the CBO baseline for FY2011 and
FY2012 respectively--would shave nearly one percentage point
off of the annualized rate of real GDP growth in Q2, but
would fade quickly with a negligible effect on growth by
year-end.
The related risk of a temporary federal government shutdown
could also lead to a fiscal drag on growth, but this appears
to be a lower probability scenario. We estimate that each
week that the federal government is shut down would reduce
federal spending by around $8bn, and could reduce real GDP
growth by as much as 0.8 pp at an annualized rate in the
quarter it occurred, but would provide a lift to growth in
the following quarter as federal activity returned to the
previous level.
The policies that several state governments are debating
related to state employee compensation and organization
appear to have--at least in the short term--little potential
macroeconomic effect. We assume that state governments will
cut spending or raise taxes no more than necessary to balance
their budgets. This amount will be determined by the level of
tax receipts available to pay for spending, not political
negotiations.
Fiscal drag is quickly reemerging as a focus, only a couple
of months after an agreement to extend tax cuts and
unemployment benefits appeared to have neutralized most of
the drag from federal fiscal policy for most of 2011. We see
federal spending cuts as the most important near-term risk
The possibility of a government shutdown is a significant but
less likely factor, while the debate over state employee
compensation seems unlikely to have a meaningful near-term
macroeconomic effect:
Federal spending cuts would result in additional fiscal
drag: In our recently updated budget deficit estimates, we
have assumed that Congress will reduce discretionary spending
by $25bn below the Congressional Budget Office's (CBO)
baseline for FY2011, and another $25bn (for a total of $50bn
below the baseline) for FY2012 (for more on these assumptions
and our budget estimates, see ``The US Budget Outlook:
Better, but Not Good Enough,'' US Economics Analyst 11/05,
February 4, 2011). By contrast, the House of Representatives
passed legislation over the weekend to cut spending for
FY2011 by $60bn from current levels (the House hasn't yet
addressed FY2012). Both scenarios would add to the drag from
federal fiscal policy on growth:
1. The modest spending cuts we assume in our own budget
forecast would lead to renewed fiscal drag. Since spending
cuts could be enacted no earlier than next month, when the
current fiscal year will be nearly half over, $25bn in cuts
would require spending in the second half of FY2011 to be
reduced by $50bn at an annual rate. Since the cut would be
phased in abruptly, it could result in a drag on growth in Q2
by as much as one percentage point (pp), but would quickly
fade over the next two quarters as spending stabilizes at a
lower level, with little effect versus current policy on the
rate of real GDP growth by year end.
2. The spending cut package that passed the House of
Representatives would have a deeper effect. Under the House
passed spending bill, the drag on GDP growth from federal
fiscal policy would increase by 1.5pp to 2pp in Q2 and Q3
compared with current law. However, we don't see this
scenario as likely; while we expect discretionary spending to
be cut, the current House proposal doesn't appear viable in
the Senate, and the president has already threatened a veto.
A federal shutdown poses less risk, as long as it is brief.
A federal shutdown can potentially occur when one or more of
the 12 annual appropriations bills have not been enacted for
the current fiscal year. Usually, Congress provides temporary
funding through a ``continuing resolution'' (CR) until
appropriations have been enacted, but from time to time,
particularly when control of government is divided, this does
not happen and funding lapses. When this occurs, any agency
or cabinet department without funding in place for the
current fiscal year must cease non-essential operations. So
far, Congress has not enacted any of the annual
appropriations bills for the fiscal year that began October
1, so a shutdown would affect virtually all non-essential
programs. That said, the potential for a federal shutdown
probably does not present a major risk:
1. While the possibility of a shutdown is real, it isn't
that likely. We wrote more extensively on the key fiscal
developments over the next few months last week (see ``The
Federal Budget Process Gets Underway,'' US Daily, February
17, 2011). The bottom line is that while rhetoric has
escalated regarding spending cuts and the threat of a
shutdown, we expect both sides to try to avoid one if
possible, with the most likely solution appearing to be a
short-term extension of funding at slightly reduced levels.
2. The effect of a shutdown is narrower than the term
implies. Even in the most protracted government shutdown to
date, from November 13 to 19, 1995 and again from December
15, 1995 to January 6, 1996, the majority of federal
employees kept working. In the first episode in November
1995, about 40% of federal employees excluding the postal
service were furloughed; in the December lapse the share of
furloughed employees dropped to less than 15%, since Congress
had managed to enact some appropriations legislation between
the two shutdowns. If a shutdown occurred next month, it
would probably affect nearly all agencies and departments,
since no appropriations legislation has been enacted so far
this year. But even so, this would imply that only around 40%
of federal employees would be affected.
3. A shutdown lasting more than a week could be meaningful.
If Congress fails to renew the continuing resolution that is
set to expire on March 4, the lapse seems likely to be fairly
short. After all, there have been several short government
shutdowns over the last few decades, but only two lasting
more than three days. But a lapse of more than a few days,
particularly toward the end of the quarter, could be more
important. If funding lapsed, non-essential services would
shut down immediately, representing around $8bn per week in
missed federal spending, assuming that 40% of federal
employees (not including the postal service) and their
activities are deemed non-essential. This would equate to
$32bn in annualized terms, or around 0.2% of GDP for each
week of shutdown. Pulling this spending out of Q2 would
reduce the contribution to quarterly GDP growth from federal
activity by a little over 0.8pp at an annualized rate for
each week the shutdown lasted, though if the shutdown ended
long enough before the end of the quarter it is quite
possible that some of the missed activity could be made up,
reducing the overall hit to growth. Otherwise, the return to
previous spending levels following a one-week shutdown would
actually increase growth in the following quarter by 0.5pp
and by smaller amounts in subsequent quarters until most of
the effect is reversed.
State budget negotiations seem likely to have the least
effect: Debate over state employee compensation and the
related issue of collective bargaining and other
organizational issues among state employee unions have begun
to make headlines in a number of states--Wisconsin, Ohio, and
Indiana are the latest. While these issues are important for
the longer-run fiscal health of state and local governments,
in the short-term their balanced budget requirements make
revenue shortfalls the most important factor driving their
fiscal stance over the coming fiscal year (for most states,
this begins in July). Political decisions will determine how
spending cuts are distributed, and will also determine the
mix of tax hikes and spending cuts, but are much less likely
to change the overall amount of tightening that will occur.
So while we continue to expect around 0.5pp in drag this year
from state and local fiscal retrenchment, recent developments
don't seem likely to change this in either direction.
Parliamentary Inquiry
Mr. ELLISON. Mr. Chairman, I have a parliamentary inquiry.
The CHAIR. The gentleman will state his parliamentary inquiry.
Mr. ELLISON. Does the author of the amendment need to be on the floor
for his amendment?
The CHAIR. The gentleman from New York had yielded back all of his
time.
Mr. ELLISON. So what is the answer to the question? Is that ``no''?
[[Page H2007]]
The CHAIR. The gentleman had no time remaining.
Mr. ELLISON. I reserve the balance of my time.
The CHAIR. The gentleman from Minnesota has the only time remaining.
Mr. ELLISON. Well, let me close, then.
We've seen 13 weeks of the Republican majority. The American people
made changes and expected jobs. They've gotten zero jobs bills at all.
What they've seen is a Republican agenda that cuts 1 million jobs, cuts
1 million jobs, and on this critical issue of Americans keeping their
homes, the Republican majority has nothing but to take away the small
programs that exist. This is a shame, and I hope the American people
are watching this debate today, Mr. Chairman.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from New York (Mr. Hanna).
The question was taken; and the Chair announced that the noes
appeared to have it.
Mrs. BIGGERT. Mr. Chairman, I demand a recorded vote.
The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on
the amendment offered by the gentleman from New York will be postponed.
Amendment No. 2 Offered by Mr. Ellison
The CHAIR. It is now in order to consider amendment No. 2 printed in
part A of House Report 112-34.
Mr. ELLISON. Mr. Chairman, Congressman Quigley has an amendment at
the desk, and I rise to offer his amendment on his behalf.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 4, after line 6, insert the following new section (and
redesignate the succeeding sections accordingly):
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) the Home Affordable Modification Program (HAMP) was
first announced in February 2009 and became active in March
2009;
(2) HAMP provides financial incentives to mortgage
servicers, borrowers, and investors to facilitate mortgage
modifications that lower borrowers' monthly mortgage payments
to no more than 31 percent of their monthly income;
(3) as of February 25, 2011, $1.04 billion of HAMP funding
has been disbursed;
(4) as of January 31, 2011, there were 539,493 active
permanent modifications and 145,260 active trial
modifications, for a total of 684,753 currently active
modifications; and
(5) each currently active modification has cost the
Department of Treasury approximately $1,518.80.
The CHAIR. Pursuant to House Resolution 170, the gentleman from
Minnesota (Mr. Ellison) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Minnesota.
Mr. ELLISON. I yield myself as much time as I may consume.
Mr. Chairman, it's important that the American people are well aware
that the Republican majority has had 13 weeks to introduce some kind of
jobs bill, and they have introduced exactly none. Instead, what they've
done is, we read the Constitution, and that's good except for we should
probably do it on our own time. And then we have pursued an effort to
cut American jobs, and now that we're dealing with housing programs, in
the midst of the worst foreclosure crisis since the Great Depression,
the Republican majority has nothing to offer except to take away the
little program that does work.
The Republican majority's quick to say, oh, those 600,000 people who
did get a modification, that's nothing, but to those people that's a
lot. To those people, that's home. A responsible majority would say,
well, how can we double the numbers, how can we triple them, how can we
help Americans stay in their homes? But that's not what we have.
What we have today in America's Congress is a Republican plan to
foreclose on the American dream. And so Congressman Quigley offers some
very commonsense findings that should be contained within this
legislation that point out the fact that as of February 25, $1.04
billion of HAMP funding has been disbursed; that as of January 31,
there have been about 500,000-plus active and permanent modifications,
about another 145,000 active trial modifications, for a total of well
over 600,000 currently active modifications. The record should reflect
that, Mr. Chairman, because the record should tell the truth. The
record should tell the truth, yes, about problems that need fixing but
also about the success that has happened.
It's a shame if we can't pass this very simple commonsense amendment,
and we need to pass it today.
I reserve the balance of my time.
Mr. McHENRY. Mr. Chairman, I rise in opposition to the amendment.
The CHAIR. The gentleman from North Carolina is recognized for 5
minutes.
Mr. McHENRY. Well, let's talk about the substance of the amendment.
If the sponsor will not, I intend to. The sponsor of the amendment and
the amendment here says that it costs about $1,500 per mortgage
modification. That is, in fact, not the case. The substance of this
amendment is extremely deceptive and flawed. In fact, the statistics
used within it are not even the dissenting views of the Democrats on
the Financial Services Committee. They're not even the views of the
Treasury Department. The Treasury Department testified in front of the
Congressional Oversight Panel and said that the permanent modifications
under HAMP would cost about $20,000. This amendment says $1,500. On its
face it's false. I would encourage my colleagues to vote against it.
I reserve the balance of my time.
Mr. ELLISON. To clearly correct the record, paragraph 5 says each
current active modification has cost the Department of the Treasury
approximately $1,518. That's an accurate statement, and I think the
gentleman ought to read the documentation much more clearly because, to
date, that has been the cost, and it's an accurate statement.
But my question is even deeper than that. What is the Republican
majority going to do about the massive foreclosure crisis in America
today? My question is, do you all stand by the proposition that it's
just laissez faire economics, and that while we have socialism for the
banks, we have hardcore capitalism for the American people? That's the
question I'd like to hear the majority answer today. But this is an
accurate statement. This has been, up till now, the existing cost of
Mr. Quigley's amendment for each modification.
I reserve the balance of my time.
Mr. McHENRY. I would say that his dissenting views are dissenting
from the ranking member of Financial Services, Mr. Frank and his staff.
$7,500 is what they claim. The Treasury Department claims $20,000.
My colleague also said that this is a little program. That's
absolutely absurd, Mr. Chairman. That's absurd. It's a $29.5 billion
program of our taxpayer dollars. But you know, I think he needs to
understand something, and my colleague needs to understand what this
program is actually doing to people.
You ask my constituent from Hickory who is in the HAMP program: We've
been in the HAMP program since February of 2010 and still have no
answer. We're being charged late fees, and we've been reported to the
credit bureau. We've been in underwater since April and on trial
payments for 6 months, which is only supposed to have been 3 months.
We've not received an answer.
Another constituent from Stanley said, We've paid payments every
month, but now we're being told we're behind in payments because it was
not the original monthly amount on our original loan, but it's the
amount we were told to pay in 2010. How can we be behind?
I've heard from constituents that tell the same story. It is reduced
monthly trial payments. They've been rejected due to eligibility issues
or lost documentation. By payments being reduced in the trial payment
period, they've ended up defaulting on their mortgage. This is a
Federal program that's actively harmed them.
{time} 1550
I would ask my colleague to look at the substance of the facts of
this program and admit it's been a failure and vote to repeal and end
this program.
I reserve the balance of my time.
Mr. ELLISON. Mr. Chairman, I would like to point out that, in fact,
the number $1,518 is accurate for the cost up until to date. That's how
much the program has cost. Projected costs are a different matter. And
I think if the
[[Page H2008]]
gentleman digs into the facts, he'll learn that.
But, again, let's talk about the bigger issue at work here. We're
talking about a system in which, under Republican control, we have not
regulated markets, have not pursued consumer protection, consumers
getting into no-doc, low-doc loans, being taken advantage of by
unscrupulous individuals whom the Republican majority refused to
regulate. Under Republican majorities in Congress and in the White
House, this chicken has come home to roost and has wreaked havoc on the
American economy. And instead of trying to do something about it, the
Republican majority is not doing anything about it.
It's one thing to get up here and say: You know what? That program
isn't working very well, and here's somebody who thinks it doesn't work
well. I'm quite sure that that story you read is probably true; but,
you know what? There are a lot of people whom it did help. And more
than that, why don't we fix it? What is the majority's program to deal
with foreclosure? Do they have one, or do they just have criticism for
what other people propose?
It's easy to be a critic. I'd rather write a critique to a movie than
make one. I think making one is tougher, even a bad one. But being a
critic is always easy, and the worst movie is better than the best
review.
So let me just say, the Republican majority has a responsibility to
respond to the American people. They have a responsibility to do
something about foreclosures. And I'm hoping to hear somewhere,
sometime, today, that they're ready to do something in favor of the
American people.
The Republican no-jobs agenda has been exposed, Mr. Chair. The
American people know they haven't done anything to create jobs or to
protect homes. All they want to do is criticize programs that could use
some improvement. They'd rather just get rid of them altogether.
I yield back the balance of my time.
Mr. McHENRY. I would say, Mr. Chairman, my colleague is right. It is
easy to be a critic of this program because it is an epic failure.
I yield such time as she may consume to my colleague from Illinois
(Mrs. Biggert).
Mrs. BIGGERT. I thank the gentleman for yielding.
We keep talking about jobs, jobs, jobs. We've talked about that for
several years now--jobs, jobs, jobs. What we are trying to do is to
create an environment that we will be able to have the private sector
create the jobs.
We need to stop funding programs that don't work with money that we
don't have. And out-of-control Federal spending is hurting our economic
recovery so that we can have those jobs. We've got a $14.2 trillion
national debt. And economists agree that reducing government spending
will create a more favorable environment for private sector growth and
the ability to create jobs. We've got so much uncertainty there right
now that we have got to stop the spending and stop the taxing and all
the things that could happen.
So exactly what unemployed Americans want and what homeowners want
and need is a job and a paycheck, not a handout or another failed
taxpayer-paid government program.
I would urge my colleagues to oppose this amendment and stop talking
about the jobs. Let's focus on the substance of these amendments.
The CHAIR. The gentleman from North Carolina has 15 seconds
remaining.
Mr. McHENRY. In closing, Mr. Chair, I would encourage my colleagues
to understand that when government taxes more and spends more, it
crowds out private sector job creation and growth. We're about growing
jobs in this Congress, and I urge my colleagues to get on board.
The CHAIR. The question is on the amendment offered by the gentleman
from Minnesota (Mr. Ellison).
The amendment was rejected.
Amendment No. 3 Offered by Mr. Canseco
The CHAIR. It is now in order to consider amendment No. 3 printed in
part A of House Report 112-34.
Mr. CANSECO. Mr. Chairman, I have an amendment made in order under
the rule.
The CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 5, after line 3, insert the following new paragraph:
``(3) Deficit reduction.--
``(A) Use of unobligated funds.--Notwithstanding any other
provision of this title, the amounts described in
subparagraph (B) shall not be available after the date of the
enactment of this subsection for obligation or expenditure
under the Home Affordable Modification Program of the
Secretary, but should be covered into the General Fund of the
Treasury and should be used only for reducing the budget
deficit of the Federal Government.
``(B) Identification of unobligated funds.--The amounts
described in this subparagraph are any amounts made available
under title I of the Emergency Economic Stabilization Act of
2008 that--
``(i) have been allocated for use, but not yet obligated as
of the date of the enactment of this subsection, under the
Home Affordable Modification Program of the Secretary; and
``(ii) are not necessary for providing assistance under
such Program on behalf of homeowners who, pursuant to
paragraph (2), may be provided assistance after the date of
the enactment of this subsection.''.
Page 5, line 4, strike ``(3)'' and insert ``(4)''.
Page 6, line 13, strike ``(4)'' and insert ``(5)''.
The CHAIR. Pursuant to House Resolution 170, the gentleman from Texas
(Mr. Canseco) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Texas.
Mr. CANSECO. I thank my colleague from North Carolina (Mr. McHenry)
for offering this bill that eliminates a wasteful and ineffective
program.
Mr. Chairman, I am offering an amendment to this bill that will
ensure that every dime of savings that comes from terminating the
program will go back to the Treasury to reduce the debt of our country.
Our country finds itself in the middle of a spending-driven fiscal
crisis. And back in November, the American people sent a message that
was loud and clear: Stop the out-of-control spending in Washington.
For 2 years, the motto in Washington was ``spend now, worry later.''
This is unfair to future generations who will inherit a bankrupt
country if we don't act.
It's only appropriate that we in this Congress begin our work by
cutting programs that simply don't work. The Home Affordable
Modification Program, or HAMP, has hurt the very people it was intended
to help by giving them false hope.
In his most recent quarterly report to Congress, the Inspector
General of TARP stated that the HAMP program ``continues to fall
dramatically short of any meaningful standard of success.'' That, Mr.
Chairman, is Washington-speak for ``failure.''
The program has done nothing to halt foreclosures. In fact, home
foreclosures in the United States have risen from 2.3 million in 2008
to 2.9 million in 2010. HAMP is not only a bad deal for homeowners,
it's a bad deal for taxpayers as well. Every child born in America
today is responsible for over $45,000 of our national debt. It is
simply unacceptable for Washington to continue spending money on a
program that doesn't work.
For 2 years, Washington acted as if it didn't have a spending
problem. And as we look around the world at countries who now find
themselves in fiscal nightmares because of out-of-control government,
we have to take a look in the mirror.
The most dangerous words in America right now are ``it can't happen
here,'' but just take a look at the facts:
Moody's has recently downgraded the debt of Spain, a country that is
expected to run a budget deficit equal to 6 percent of GDP in 2011;
Today, Portugal and Greece were downgraded by the S&P because of
overspending and budget deficits;
And now the United States is expected to run a much greater deficit
of 9.8 percent of GDP in 2011;
Admiral Mullen, the Chairman of the Joint Chiefs of Staff, has stated
that the most significant threat to our Nation and our national
security is our debt.
So make no mistake about it: It can happen here, and it will happen
here unless something is done.
I just returned from a constituent workweek in my district, the 23d
District of Texas. I had many town hall meetings and conversations with
constituents, and all the while I heard
[[Page H2009]]
over and over again their concerns of our exploding national debt.
{time} 1600
Speaking with one constituent, who is an example of every constituent
that I spoke to, Will and Debbie Brenson, are most concerned about
their grandchildren, Katlin and Taylor, what kind of a country are they
going to inherit, certainly, not with the opportunities that they had
to build their small business in Fair Oaks, Texas.
If we don't change course, we will be guilty of committing an
intergenerational theft, the likes of which no country has ever seen.
We'll be the first generation of Americans to ever leave the next
generation with a diminished future.
My colleagues on the other side of the aisle often feel that only
government can steer our economy on the right course, but we now know
just how wrong that argument is. Unemployment is at an unacceptable 8.9
percent, and over 13 million Americans remain unemployed.
We are on track for our third straight $1 trillion deficit, and we
don't have much to show for it. We have to put an end to wasteful
spending, and we must reduce the debt for future generations.
Mr. McHenry's bill, and my amendment, with them we will stop wasting
taxpayer dollars on failing programs and ensure that any savings from
termination are not recycled into yet another program. The savings will
go towards paying down our country's exploding debt.
I urge passage of my amendment.
I yield back the balance of my time.
Mr. FRANK of Massachusetts. Mr. Chairman, I have the right to close,
and I am my only speaker.
The CHAIR. Does the gentleman wish to claim time in opposition?
Mr. FRANK of Massachusetts. Yes, I claim the time in opposition, and
I'm the only speaker, so I will reserve my time.
The CHAIR. The gentleman from Massachusetts has the only time
remaining.
Mr. FRANK of Massachusetts. Has the gentleman used up all the time?
The CHAIR. The time of the gentleman from Texas has expired.
Mr. FRANK of Massachusetts. I apologize. I heard him say reserve, and
I misunderstood that.
I will say about this amendment that it is harmless and perfectly
okay for people to claim credit for what's already been done, kind of
like going to a taxidermist and shooting the bear.
If this amendment didn't happen, the same result would be there. But
here's the result: temporarily this comes out of tax funds. But because
it's TARP money, it's subject to a--and by the way, we passed an
amendment that says it goes back to the Treasury temporarily.
I say ``temporarily'' because over Republican objections, and I hope
they're going to relent in these, we put into the TARP legislation
language that says that in 2013 whatever hasn't been paid back from the
TARP to the general Treasury will be assessed to financial
institutions.
What that means is that if this does have a net cost to the Treasury,
in 2013 the President in power at that time will be directed to send us
legislation to require that this come out of the large financial
institutions, that is, nothing from the Treasury.
Now, I say I'm worried about it because we've had two further
instances of this which the Republicans have opposed. We've just had a
package of four bills. Two of them came out of the financial reform
bill, their financing did: help for the unemployed homeowners and the
neighborhood stabilization program.
In the version of the bill that we put first in the conference, that
money was to be recovered by an assessment on banks with $50 billion or
more and hedge funds with $10 billion or more; and Republican
opposition to it killed it.
So, yes, it is true that temporarily, now, the unemployed homeowners
and the neighborhood stabilization come out of the Treasury. We have
filed legislation, and I just refiled it last week, but it goes back to
where we were in July that would take it from the large financial
institutions.
Similarly, by the way, in the financial reform bill we had a
provision that said, over Republican objections, that the FDIC would
immediately assess the amount that we thought we would need for the
TARP on the large financial institutions.
So let's be very clear. If we carry out our promises and commitments,
this money will not come out of the taxpayer; it will come out of the
TARP. It will come out of the large financial institutions.
I can't say the same for certain other wasteful spending. Members on
the other side insisted, for example, in overriding the objection of
Secretary Gates to the second engine. Now, the gentleman from Texas
voted with Secretary Gates and me, and I appreciate that.
But a majority of Republicans voted to give him the second engine,
even though he said he'd tell the President to veto the bill. People
disregarded, a majority in the House, on both sides, the request that
the Osprey be killed.
In other words, people cite Secretary Gates and cite Admiral Mullen,
but we still hear on the Republican side criticism of them for trying
to live up to their own words when they say, well, we're going to limit
military spending.
I don't think it is a reasonable policy to cite their worries about
the deficit and then override them in specific cases. And we also have,
of course--and here the Pentagon wanted it, I think they were wrong--
$1.2 billion my colleagues voted for--I voted against it--to spend
money to build up the security forces of Iraq. You talk about money not
being well spent. At its worst, I cannot imagine anyone thinking that
any foreclosure program here would be spent worse than it is being
spent in Iraq.
By the way, the Inspector General did say he was critical of the
program. When asked by the gentleman's Texas colleague, Mr. Green of
Houston, he said, no, he would not abolish it. He specifically said he
wouldn't abolish it. He was asked that in the hearing and said no.
And we have consistently heard from the other side a statistic they
have never yet validated, that more people were harmed than helped.
None of the people they quote say that.
Yes, it's a program that's difficult because we wouldn't do
bankruptcy and we have left the voluntary decision in the hands of the
private sector. That's why this argument that the private sector can do
it better is so nonsensical. It is the refusal of the private sector to
fully participate in this program in its full spirit that's been the
problem.
Mr. CANSECO. Will the gentleman yield?
Mr. FRANK of Massachusetts. I yield to the gentleman from Texas.
Mr. CANSECO. Are you in favor of the amendment or opposed to the
amendment?
Mr. FRANK of Massachusetts. I am indifferent. Well, I'm against the
amendment. I take it back. I am against the amendment because I had to
be against the amendment to get the time to speak. So I am against the
amendment.
But I'm not against the amendment on substantive grounds. I'm against
it on aesthetic grounds. I hate to clutter things up with an amendment
that doesn't do anything.
Well, let me go back to the substance. The substance is that we have
a false claim that this is because of the taxpayers, when the TARP will
make sure that it doesn't come out of the taxpayers, the TARP
legislation.
And Members who vote to send money, $1.2 billion, to build up the
security forces of Iraq, please don't have them tell me, Mr. Chairman,
that they're for efficient spending. The security forces in Iraq.
How about Afghan infrastructure? The majority voted to send money to
Afghanistan for infrastructure. There is a great mark of efficiency.
The CHAIR. The question is on the amendment offered by the gentleman
from Texas (Mr. Canseco).
The amendment was agreed to.
Amendment No. 4 Offered by Mr. Miller of North Carolina
The CHAIR. It is now in order to consider amendment No. 4 printed in
part A of House Report 112-34.
Mr. MILLER of North Carolina. Mr. Chair, I seek to offer the
amendment as the designee of Mr. Inslee of Washington.
The CHAIR. The Clerk will designate the amendment.
[[Page H2010]]
The text of the amendment is as follows:
Page 5, line 6, before the period insert ``, Effectiveness
of Program, and Replacement Program''.
Page 5, line 8, before ``determine'' insert ``(i)''.
Page 5, line 9, after ``by'' insert ``homeowners meeting
the criteria under the terms of such Program for eligibility
for assistance under such Program, the effectiveness of such
Program, and the impact of such Program on such eligible
homeowners, including the extent of usage by''.
Page 5, line 11, before the period insert the following:
``, (ii) identify improvements to the Program and best
practices under the Program, and (iii) determine the need,
and appropriate guidelines and standards, for a mortgage
modification program of the Secretary to replace the Home
Affordable Modification Program that is (I) based on the
guidelines and standards for such Program, with appropriate
improvements as identified by the study, and (II) available
to homeowners who meet the criteria under the terms of such
Program for eligibility for assistance under such Program''.
Page 5, lines 16 and 17, strike ``paragraph (1)'' and
insert the following: ``subparagraph (A), identifying the
improvements to and best practices under the Home Affordable
Modification Program identified pursuant to the study,
setting forth the Secretary's determination of the need for,
the appropriate guidelines and standards for, the mortgage
insurance program determined pursuant to the study,''.
Page 5, line 21, before the period insert the following:
``and to the mortgage insurance program identified and
described pursuant to subparagraph (A)(iii)''.
Page 6, after line 12, insert the following:
``(D) Implementation.--Upon the expiration of the 90-day
period beginning upon the submission to the Congress of the
report required under subparagraph (B), the Secretary shall,
only to the extent that amounts for such purpose are provided
in advance in appropriations Acts, implement the mortgage
insurance program described in such report pursuant to
subparagraph (A)(iii) through issuance of appropriate
guidelines and standards set forth in the report.''.
The CHAIR. Pursuant to House Resolution 170, the gentleman from North
Carolina (Mr. Miller) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from North Carolina.
Mr. MILLER of North Carolina. Mr. Chairman, first I want to assure
the gentleman from Texas that if he's worried about the debt burden
that children being born today face, with respect to this program,
unless one of those children takes a job on Wall Street within the next
two years, like the talking baby in the ETrade ads, they really are not
going to have to pay for this program. This program is going to come
from the financial sector. That was a promise made in the TARP
legislation; and unless they plan to break that promise, and I'm
beginning to get the feeling that they are, this is not going to be a
cost borne by innocent taxpayers, but by the industry that created the
mess.
Now, many people have criticized the TARP program, including me. The
Congressional Oversight Panel has; the Special Investigator, Inspector
General for the TARP program; yes, a lot of people have criticized the
program.
Unlike Republicans, a lot of us have been trying to figure out a way
to make it work. I have offered several suggestions.
{time} 1610
I have criticized it continuously for 2 years and said what we should
be doing instead, and on what we should be doing instead there has been
a deafening silence from Republicans.
We know we can do something. We know we have to do something. The
foreclosures and the drop in home values are grinding down the middle
class. The value they have in their home, the equity they have in their
home is the bulk of their life savings. So when their home goes down in
value, their life savings go away. We have got to get control of this.
We know we can make something work because we have the tool. One of the
most successful programs in the New Deal got control of the foreclosure
crisis then, and the Federal Government made a profit from the program.
And there is reason to think that there will be real rules, real
enforceable rules soon. There are settlement talks pending on
enforcement action by States Attorney Generals and by the Federal
agencies for the violations of law by the biggest banks that handled
most of these mortgages, which Republicans have opposed; and there are
rules in the offing from the CFPB, the Consumer Financial Protection
Bureau, which they have also proposed, something that really will make
this work.
Mr. Inslee's amendment is much the same. It requires a pullback, a
hard look at the program and what will make it work, what are the
guidelines that need to make it work, what are the standards that need
to make it work, and requires that those suggested changes be
implemented in the program.
I urge adoption of the amendment.
Mr. McHENRY. Mr. Chairman, I rise in opposition to the amendment.
The CHAIR. The gentleman from North Carolina is recognized for 5
minutes.
Mr. McHENRY. I think this is a fundamentally flawed amendment.
What this amendment essentially does is say that the last agency in
government that we had asked to conduct a review of this program would
be in charge of the review of the program and would be in charge of
designing a new program, even though the previous program they designed
is flawed and harmful and a failure, and immediately report back to
Congress a program that is basically the same.
Look, Ronald Reagan once said: The closest thing to eternal life is a
Federal program. That quote is this amendment. I ask my colleagues to
oppose it.
I reserve the balance of my time.
Mr. MILLER of North Carolina. I yield back the balance of my time.
Mr. McHENRY. I would say that you read a quote from the Special
Inspector General from TARP, Mr. Barofsky: ``The basic idea of a well-
run government program is to have clear goals, have a plan to meet
these goals, measure progress along the way against these goals, change
your program when necessary so you can still achieve those goals.
``But this is how the TARP has been implemented and, in particular,
this program within TARP: set goals. Ignore goals entirely. Hope for
the best. When the best is different, change your goals and say you
never really meant it when you had those goals. Pretend that the
program is a success, even though it is not meeting these goals.''
That is Mr. Barofsky's analysis of Treasury's implementation. I would
ask my colleague, if that is in keeping with his expectations for a new
government program, then, I would submit, that is what they will come
up with.
This Treasury has defended TARP and defended HAMP, and in particular
HAMP, which has been roundly criticized even by La Raza, which has been
a tried and true liberal activist for a long time. But Treasury has
been defending it. Why? I'm not sure. But instead of reforming the
program, instead of fixing the program, they refuse to do it; and so we
must end it.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the gentleman
from North Carolina (Mr. Miller).
The amendment was rejected.
Amendment No. 5 Offered by Ms. Waters
The CHAIR. It is now in order to consider amendment No. 5 printed in
part A of House Report 112-34.
Ms. WATERS. 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:
Page 7, line 2, strike the last closing quotation marks and
the last period.
Page 7, after line 2, add the following:
``(5) Notification to hamp applicants required.--
``(A) In general.--Not later than 30 days after the date of
the enactment of this subsection, the Secretary of the
Treasury shall inform each individual who applied for the
Home Affordable Modification Program and will not be
considered for a modification under such Program due to
termination of such Program under this subsection--
``(i) that such Program has been terminated;
``(ii) that loan modifications under such Program are no
longer available;
``(iii) of the name and contact information of such
individual's Member of Congress; and
``(iv) that the individual should contact his or her Member
of Congress to assist the individual in contacting the
individual's lender or servicer for the purpose of
negotiating or acquiring a loan modification.''.
The CHAIR. Pursuant to House Resolution 170, the gentlewoman from
California (Ms. Waters) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
[[Page H2011]]
Ms. WATERS. Mr. Chairman, I rise in strong support of my amendment,
which is a commonsense provision that provides transparency and clarity
for distressed homeowners.
My amendment would require the Secretary of the Treasury to send a
letter to HAMP applicants that they will not be considered for a
modification due to termination of the program, and that they can
contact their Member of Congress for assistance in negotiating with or
acquiring a loan modification from their servicer.
I raise this amendment because my friends on the opposite side of the
aisle have the majority in the House, and they will probably prevail on
this amendment; but I think that we have a responsibility to say to our
constituents what we are doing and what we are not doing.
Many of them have just begun to learn about the loan modification
program, the HAMP program, and all of a sudden it is going to be pulled
out from under them if this amendment prevails and if it passes on the
opposite side of the aisle and in the Senate, et cetera; and the
constituents need to know exactly what we have done.
Now, I worked with Mr. McHenry on this amendment and we worked out
some language that he thought was fair, and I believe we do have his
support. That is not to say that I support the bill because I don't
support this amendment. I don't support this bill that would literally
dismantle the HAMP program.
Yes, there are criticisms about this program. I and others would have
liked for it to have been broader, for it to have helped more people.
But don't forget, over 600,000 people have been helped. I know the
target was 3 million to 4 million people, and we certainly haven't come
close to that.
But to do away with this program would leave the American taxpayers
who have gotten into loans, oftentimes tricked into these loans, misled
into these loans by the loan initiators, the banks and the mortgage
companies that told them that they could help them get a mortgage even
though these were exotic products, these were teaser loans, these were
no doc loans, these were loans that were going to reset and cause the
taxpayer to be in a loan that they could not afford.
Many innocent people trying to live the American Dream signed on the
dotted line. And also there was a lot of fraud involved where some of
these loan initiators signed on the dotted line for the homeowner or
the would-be homeowner. And so we have this crisis, this subprime
crisis that we have been going through, and there is a lot of misery
out there, people who were just trying to own a home who now find
themselves in foreclosure.
The banks were not helping with loan modification, so we had to come
up with something. The administration came up with the HAMP program. It
is a voluntary program. But they signed on to these agreements with the
banks to say that they would do loan modifications under certain
conditions. And the administration had to do this because the banks
were not helping out the homeowners. As a matter of fact, the banks
said: Well, we don't have anything to do with this anymore. It is up to
the servicers.
What a lot of people don't know is who is the servicer. The servicer
is simply in most cases a company that is owned by the bank. They own
their own servicing company, which means that once the mortgage is
signed on by the homeowner, they now give it to this other company that
they own, these servicers; and the servicers have the responsibility
for collecting on the mortgage, for collecting on late fees, for
collecting on attorney fees, and for doing loan modifications. But the
homeowners couldn't get to them. HAMP is supposed to help them get to
them.
These servicers have gotten away with being unregulated for all of
these years. As a matter of fact, there are no standards for servicers.
If you call one bank, they will send you to their loss mitigation
department. What they don't tell you, banks such as Bank of America,
their loss mitigation is an offshore operation. You may be talking to
somebody in India who has got this little cookie-cutter sheet which
says: How much money do you make? How many times have you been late on
your payment? Let's figure out how not to give you a loan modification,
but maybe to give you a few months to catch up. But loss mitigation
means a lot of different things in all of these different banks, if you
are lucky enough to get to the servicer.
The CHAIR. The time of the gentlewoman has expired.
Ms. WATERS. I would just simply ask for support for transparency and
support to keep this program going.
{time} 1620
Mrs. BIGGERT. I claim the time in opposition, even though I am not
opposed to the amendment.
The CHAIR. Without objection, the gentlewoman from Illinois is
recognized for 5 minutes.
There was no objection.
Mrs. BIGGERT. I just have a question for the sponsor of this
amendment. You have had several amendments in several of these bills,
and I wanted to make sure this is the same as what you and Mr. McHenry
agreed to.
Ms. WATERS. Yes, this is absolutely the same thing we agreed to.
Mrs. BIGGERT. You are just asking for this amendment, not to change
the bill or anything?
Ms. WATERS. I beg your pardon?
Mrs. BIGGERT. You are just asking for support of this amendment and
not for anything concerning the bill?
Ms. WATERS. This amendment is a transparency amendment that I worked
on with Mr. McHenry, where our constituents would be notified and have
an opportunity.
Mrs. BIGGERT. Reclaiming my time, we accept the amendment.
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Waters).
The amendment was agreed to.
Amendment No. 6 Offered by Ms. Jackson Lee of Texas
The CHAIR. It is now in order to consider amendment No. 6 printed in
part A of House Report 112-34.
Ms. JACKSON LEE of Texas. 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:
Add at the end the following new section:
SEC. 3. STUDY.
(a) In General.--Not later than the end of the 60-day
period beginning on the date of the enactment of this Act,
the Secretary of the Treasury shall begin a study to identify
what aspects of the Home Affordable Modification Program were
successful and most effectively carried out the original
purpose of the Program.
(b) Report.--Not later than the end of the 6-month period
beginning on the date of the enactment of this Act, the
Secretary shall issue a report to the Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) legislative recommendations for a new mortgage
modification program that could more successfully and
effectively achieve the original purpose of the Home
Affordable Modification Program.
The CHAIR. Pursuant to House Resolution 170, the gentlewoman from
Texas (Ms. Jackson Lee) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from Texas.
Ms. JACKSON LEE of Texas. I thank the chairman very much, and I thank
my colleagues very much as well.
As we come to the floor of the House, I know that Members on both
sides of the aisle are committed to knowing the facts. We want to know
the facts when we go to town hall meetings when our constituents pose
very deliberative questions. We want to give them numbers. We want to
be able to reason with them. And one of the deliberative aspects of
legislation is that you fix it; you don't end it.
So I rise today to ask my colleagues to support my amendment, an
amendment that I think makes common sense. It is an amendment that
thoughtful Members can support. It is an amendment that, whether you
are Republican or Democrat, you want to know what works.
My amendment would call on the Secretary of the Treasury to
commission a study that would identify what aspects of the HAMP program
were successful and effectively carried out the original intent of the
program. It would then require the Secretary to issue a report to
Congress containing all findings and determinations of the
[[Page H2012]]
study and legislative recommendations for a new mortgage modification
program that could more successfully and effectively achieve the
original purpose of the Home Affordable Modification Program.
We have to thank the administration for recognizing that people were
literally on their knees. There is no doubt that we have different
philosophies. My friends on the other side of the aisle, they keep
talking about the deficit and the depressing aspect of the $1 trillion
debt. We keep talking about invest and grow the economy. When you grow
the economy, you have the ability to pay down on your debt; you have
the ability to address the question of the debt ceiling. So my question
is: Why wouldn't you want to know the best practices?
Let me give you some of the myths that have been presented. One
suggestion is that this legislation that we have before us to end the
HAMP program will prevent another $30 billion from going to one of
these programs. That is inaccurate. The repeal of this program will, in
essence, save only $1.437 billion. That is all that it will save. But,
more importantly, what you will have is you will throw homeowners into
the streets when the major asset for Americans, middle class,
hardworking Americans, is their home. Let's find out the best practices
and make this work.
The monthly rate of new loan approvals would have to triple in order
to approximate the amount cited by the chairman of this committee,
suggesting $30 billion. Actually, we expect the rates are, instead,
likely to modestly decline. So you are not going to have that much
savings and it is not going to, in essence, blow up with so many people
using it that you are going to use this amount of money.
One Republican has suggested that the program goes to private
lenders. Well, for every dollar that the HAMP program has paid out,
homeowners have received from lenders $5 in reduced mortgage payments.
Most of the program funds do not go to lenders but go directly to
homeowners as incentives on the on-time mortgage payments. It is giving
individuals a leg up.
It is interesting that we would not want to focus on the best
practices when, if you look at this map, you will see that every single
State has received a HAMP impact, someone has a mortgage problem that
the HAMP program has helped.
Now, can we fix it? Yes, we can make it better. But let me tell you
about a person by the name of Laurel. She indicated how this program
has helped her. ``Well, my income has not fully come back.'' She was
unemployed. ``I am making much less than I was making before, so it has
been a difficult time. With the modification, my mortgage payment has
gone down $800 and I am able to make my payment on time. I have been
able to remain in the home that I love, and that has provided me with
great stability. I am extremely grateful that I received the
modification.''
She has saved an asset that contributes to the economy. What would be
the result of ending the modification program? I can tell you what the
result would be. The result would be that Laurel would dump another
home onto the market that no one could buy, that would bring down the
quality of the neighborhood and the house appraisal prices of the
neighborhood and, therefore, add another dent to the economy.
Invest and grow. And the question is, all of my friends who are there
on the other side of the aisle, here is a document that is 15 pages
long that shows that your district, your cities, have been impacted
positively by the HAMP program. Job growth is picking up. Invest and
grow jobs should be the mindset of the American Congress, for that is
what we were sent back to Washington to do.
There is no doubt that we have a collective commitment to bringing
down the debt. There is a collective commitment to doing that, and we
can look reasonably at what and how to do it. But when you don't even
have the best practices or know why you are repealing something, and
right now people are in the middle of addressing this question of
modifying their mortgage.
I ask my colleagues to support my amendment because it does in fact
provide a lifeline, and it invests in the economy, creates jobs and
stabilizes the middle class.
With regard to the HAMP program, I would like say, ``Mend it, don't
end it!''
The HAMP program has not been perfect, but it has helped a
considerable number of Americans modify their mortgages in order to
prevent foreclosure and keep their homes and livelihoods that they work
so hard for day in and day out.
The White House agrees--The White House has indicated that the
President will veto the HAMP termination bill if it passes.
As written, this bill would prohibit new mortgage loan modifications
under the Home Affordable Modification Program, (HAMP), which is funded
under authority generally referred to as TARP, pursuant to the
``Emergency Economic Stabilization Act of 2008'' (also known as EESA).
Despite termination of the program, this bill would grandfather in
assistance to homeowners who, prior to the date of enactment, had
already been extended an offer to participate in HAMP, either on a
permanent or trial basis.
I am here before you today to offer an amendment that I believe will
greatly enhance this bill by making it a vehicle that providing us, the
Members of Congress, with very useful information. If H.R. 839 were to
pass, terminating the HAMP program, my amendment would call on the
Secretary of the Treasury to commission a study that would identify
what aspects of the HAMP program were successful and effectively
carried out the original intent of the program.
It would then require the Secretary to issue a report to Congress
containing all findings and determinations of the study, and
legislative recommendations for a new mortgage modification program
that could more successfully and effectively achieve the original
purpose of the Home Affordable Modification Program.
Parliamentarian ruled that the amendment is germane.
Congressional Budget Office, CBO, found that there is no cost
associated with my amendment.
If the HAMP program is terminated, we will still be left to deal with
the problem of foreclosed homes in a recovering, yet very fragile,
housing market. With the unemployment rate still hovering at an
uncomfortably high rate, Americans are still dealing with the
difficulties of making ends meet. Although our economy is slowly but
surely on the path to recovery, Americans struggling to find work will
still be faced with the painful reality of losing their home, although
now, without an avenue for assistance with refinancing.
To avoid another slump in the housing market, and to avoid dealing
yet another blow to our fragile economy, if H.R. 839 becomes law, it
will be necessary for us to consider a new mortgage refinance and
modification program in the future to prevent stalling the recovery of
the housing market, or even worse, allowing it to crumble once again.
If that day were to come, it would be most useful to have firm facts
and strong statistics about what methods are proven to be most
effective in solving the problems associated with high foreclosure
rates and ensuring that home loan modifications are both permanent and
successful.
The HAMP program was put in place by the Obama Administration in
early 2009 with the intent to modify mortgage loans in order that
distressed borrowers might have a better chance at making payments and
holding onto their homes. The program has successfully modified over
500,000 million mortgages to prevent foreclosure and keep homeowners in
their homes. While well intentioned HAMP program has encountered some
difficulties--not yet reaching the goal set by the Obama Administration
of helping 3 to 4 million homeowners.
Nonetheless, the program has effectively helped a number of
homeowners with successful loan modifications that allowed them to keep
their homes. To date, there are 539,493 homeowners with permanent HAMP
loan modifications.
New permanent HAMP modifications have averaged around 29,000 per
month over the last six months of 2010. Therefore, assuming a modestly
declining rate from this, a reasonable estimate is that program
participation will double by the end of next year, for a cumulative
total of 1.1 million homeowners. Based on this estimate, the bill would
deny modifications to more than a half million homeowners at risk of
foreclosure.
This is a sign, that despite its problems, there are some positive
and effective aspects of the HAMP program that should be considered
when we look to replace the HAMP program if H.R. 839 is passed
terminating this program. My amendment would call for a detailed study
that would highlight these best practices, while also ensuring that
those aspects of the program which may have hampered its initial
success are not repeated.
There are a number of reasons the program has not met the original
Obama Administration goal of helping 3 to 4 million homeowners,
[[Page H2013]]
some of which are actually sound and appropriate aspects of the
program. HAMP appropriately excludes different categories of
borrowers--including investors, owners of second homes, homeowners
whose mortgages are unsustainable even with HAMP assistance, and
homeowners that can pay their mortgage without government assistance.
These particular categories of borrowers are either unlikely to
refinance successfully, or are not those who the HAMP program
originally intended to help--those bar rowers who are in dire need of
assistance to keep from losing their home.
Another reason the HAMP program has not reached its desired goal is
because banks and other mortgage servicers were understaffed and
unprepared to carry out loan modifications--resulting in widespread
complaints about lost files, non-responsiveness, etc. Furthermore,
legally, mortgage holders can not be forced to reduce mortgage
payments. Programs have had to be voluntary, incentivizing lenders to
reduce mortgage payments in lieu of foreclosing on the loan.
One of the more fundamental flaws in the HAMP Program was that it
does not take certain circumstances into consideration. For instance,
the program does not account for second mortgages than many homeowners
may have on their property. As a result, some homeowners have ended up
paying more than they originally owed, an outrageous thought
considering the intended goal of the program. The study and report that
would result from my amendment would bring these types of issues to
light to ensure that a new program would better achieve the goals set
by the Obama Administration
Temporary Modifications--There were many temporary modifications that
did not result in permanent modifications but . . . the Obama
Administration says 50 percent of those who got temp modifications
received permanent modifications in the private market (so this means
HAMP temporary modifications did in fact help homeowners)
These types of strengths and weaknesses are invaluable pieces of
information. My amendment would simply ensure that Congress would be
privy to an official report containing this information and
determinations from those experts who have worked most closely with the
HAMP program since its inception.
With that, Mr. Chair, I ask that this committee strongly consider
accepting my amendment. Thank you again for the opportunity to testify.
Mr. McHENRY. Mr. Chairman, I rise in opposition to the amendment.
The CHAIR. The gentleman from North Carolina is recognized for 5
minutes.
Mr. McHENRY. Mr. Chairman, I am not sure what my colleague from Texas
has heard at her town hall meetings, but what I have heard from my
constituents, I have one resident of Stanley, North Carolina, who said,
``We have paid payments every month.'' Now, I say to my colleague, I
have read this before, but I wasn't sure if you were on the floor for
this. But one constituent of mine said, ``We have paid payments every
month. But now we are being told we are behind in our payments because
it is not the original monthly payment on our original loan, but it was
an amount we were told to pay in 2010. How can we be behind?''
I would ask my colleagues to read the Special Inspector General's
report, ``The Details of Failures of HAMP.'' I ask my colleagues to
listen to their constituents. More people in America, I would remind my
colleagues, more people in America, close to 800,000 Americans, have
been actively harmed and left worse off under this Federal program than
have actually been helped.
My colleague points to a laudable survey of the positives. The survey
doesn't detail the destroyed lives that this HAMP program has pushed on
people, has created.
So, this amendment, the reason why I rise in opposition is because
this amendment is similar to ones we have had in committee that we
rejected in committee. This directs the Treasury to conduct a study of
HAMP and would be completely counterproductive. The reason why it would
be completely counterproductive is over the last 6 months we have seen
the Treasury Department engage in a frantic 6-month media campaign for
this program. They won't admit it is a failure; although, the rest of
the world is largely saying it is a failure. They even have offered a
veto threat on this legislation.
The Special Inspector General, Mr. Barofsky, said just earlier this
week, ``This Treasury Department is so content with the wretched,
shameful status quo, they refuse to even acknowledge that the program
is a failure.'' And that is why simply to offer the Treasury to study
this really is beneath the House.
{time} 1630
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the
gentlewoman from Texas (Ms. Jackson Lee).
The question was taken; and the Chair announced that the noes
appeared to have it.
Ms. JACKSON LEE of Texas. Mr. Chairman, I demand a recorded vote.
The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on
the amendment offered by the gentlewoman from Texas will be postponed.
Amendment No. 7 Offered by Ms. Matsui
The CHAIR. It is now in order to consider amendment No. 7 printed in
part A of House Report 112-34.
Ms. MATSUI. 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:
Add at the end the following new section:
SEC. 3. CONTINUED REPORTING ON MORTGAGE MODIFICATIONS.
Section 110 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5220) is amended by adding at the end the
following new subsection:
``(e) Continued Reporting on Mortgage Modifications.--
``(1) Findings.--The Congress finds that--
``(A) the data on mortgage modifications collected from
mortgage servicers and lenders and made available to the
public pursuant to the guidelines of the Home Affordable
Modification Program has been a valuable tool for increasing
transparency; and
``(B) that the public would be served by having such
servicers and lenders continue to report information on
mortgage modifications.
``(2) In general.--Each mortgage servicer and mortgage
lender who participated in the Home Affordable Modification
Program shall, monthly, disclose on a World Wide Web site
owned by such servicer or lender, the following information:
``(A) The number of requests for mortgage modifications
that the servicer or lender has received.
``(B) The number of requests for mortgage modifications
that the servicer or lender has processed.
``(C) The number of requests for mortgage modifications
that the servicer or lender has approved.
``(D) The number of requests for mortgage modifications
that the servicer or lender has denied.
``(3) Report to the congress.--At the time a mortgage
servicer or mortgage lender discloses information pursuant to
paragraph (1), such servicer or lender shall also issue a
report to the Congress containing such information.
``(4) Rulemaking.--The Secretary of the Treasury shall
issue such regulations as may be necessary to carry out this
subsection, including regulations for the protection of the
privacy interest of those individuals seeking mortgage
modifications with the servicer or lender, including the
deletion or alteration of the applicant's name and
identification number.''.
The CHAIR. Pursuant to House Resolution 170, the gentlewoman from
California (Ms. Matsui) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
Ms. MATSUI. I yield myself such time as I may consume.
Mr. Chairman, I rise today to offer an amendment to H.R. 839, the
HAMP Termination Act, that calls on mortgage lenders to continue to
publicly report basic home loan modification information.
Because of an amendment I offered to the Dodd-Frank Wall Street
Reform and Consumer Protection Act which passed the house unanimously
last Congress, mortgage lenders and services participating in the Home
Affordable Modification Program are required to report basic loan
modification information to the Department of the Treasury. Due to the
enactment of my amendment, we now know that 2.5 million Americans have
applied to participate in the Home Affordable Modification Program, and
well over 600,000 of those applicants began permanent modifications.
In the Sacramento region, over 9,000 of the nearly 12,000 homeowners
who have applied for permanent modifications have been approved,
providing assistance to thousands of homeowners in my district. This
information is crucial to accountability and transparency and for this
Congress to measure the performance of the mortgage industry.
[[Page H2014]]
The amendment I offer today requires the same basic home loan
modification reporting to continue, such as the number of applications
they receive, the number of applications processed, or the number of
modifications they approve or deny.
In its current form, H.R. 839 would eliminate HAMP, and, as a result,
financial institutions who received HAMP taxpayer funds would no longer
be obligated to continue reporting such basic information to the
public.
Mr. Chairman, the foreclosure crisis was the root cause of the dire
economic situation. It led to the near collapse of our financial
system, increased unemployment, and caused the housing and credit
crisis. Sadly, there are still millions of American homeowners facing
foreclosure, and my home district of Sacramento, California, has been
hit especially hard by this crisis.
During the last few years, I have been to foreclosure workshops in my
district where I have met with constituents who are facing losing their
home. I was recently contacted by Joan, a constituent of mine who would
have lost her house without assistance from HAMP. Joan paid her bills
on time and was current on her mortgage when her son was diagnosed with
a psychiatric disorder that rendered him unable to work. When her adult
son moved in with her shortly after, Joan was no longer able to provide
for him and make her mortgage payments at the same time and sought
assistance. With proper assistance, Joan received a low interest rate
HAMP loan and now is able once again to make her mortgage payments on
time.
Joan shared with me that her home was saved due to the HAMP program
and that her son would have been homeless without it. She said, ``I
have no words to express my feelings of gratitude for my loan
modification.''
Mr. Chairman, I've heard a significant number of similar stories in
Sacramento. It is essential that we require lenders to continue to
report their loan modification activities. We need to know how many
Joans are out there struggling but seeking assistance. We need to know
whether lenders are doing all they can.
Mr. Chairman, this amendment will ensure a level of transparency and
accountability continue. I urge my colleagues to support this
commonsense transparency amendment.
I reserve the balance of my time.
Mr. McHENRY. Mr. Chairman, I rise in opposition to the amendment.
The CHAIR. The gentleman from North Carolina is recognized for 5
minutes.
Mr. McHENRY. I appreciate the gentlelady offering this amendment.
Unfortunately, I must rise in opposition to it.
The requirements in this amendment are both cumbersome and
unnecessary. It requires servicers and lenders to provide information
regarding proprietary information on their entire portfolio of loans,
not just HAMP. The reporting requirement for, quote, requests for
modifications is undefined in the amendment and is, therefore,
unworkable based on the research that we have done.
It's unclear why this new role is necessary in the contractual
negotiations between private citizens and private companies.
Furthermore, servicers already provide results of their modification
efforts to the HOPE NOW Alliance as well as in their annual reports
without disclosing proprietary information. In fact, the HOPE NOW
Alliance reports servicers having completed 961,355 proprietary
modifications in 2008; 1,172,490 proprietary modifications in 2009; and
1.2 million in 2010.
Now I might add, this is many multiples in the private sector in
terms of mortgage modifications than have been provided under the HAMP
government funded program that we're discussing here today and trying
to eliminate here today, the program that has hurt just shy of 800,000
Americans, destroyed their credit, taken their savings and, at the end
of the day, taken their homes. I would encourage my colleagues to vote
against this amendment.
I reserve the balance of my time.
Ms. MATSUI. I yield myself the balance of my time.
Mr. Chairman, I just want to say that these basic reporting
requirements are not new. It's about HAMP. Every financial institution
receiving HAMP funds from the TARP program is currently required to
report this information today.
The current industry reporting requirements have played a significant
role in providing a sense of transparency and accountability, and
that's what we're talking about, transparency and accountability in our
efforts to help homeowners and stabilize our housing market. Requiring
basic information to be reported will provide this Congress with the
information to make future decisions on loan modification programs as
well as monitor the performance of the mortgage industry.
Mr. Chairman, I ask my colleagues to join me in supporting this
important amendment to bring clarity and transparency to the mortgage
industry.
I yield back the balance of my time.
Mr. McHENRY. Mr. Chairman, in closing, I would encourage my
colleagues to vote ``no'' on this amendment. The reporting requirements
my colleague references are required by the servicers that are
participating in HAMP, and they are required to disclose the
information related to the Federal program, HAMP.
This amendment goes much further and requires these servicers to
disclose hundreds of thousands of other modifications that are in the
private sector. We know the aggregate number. What is being requested
here is detailed information that is not correct for personal privacy
and is not proper in keeping with the hundreds of thousands of private
transactions going on across this country.
I urge my colleagues to vote ``no.''
I yield back the balance of my time.
The CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Matsui).
The amendment was rejected.
Amendment No. 8 Offered by Mrs. Maloney
The CHAIR. It is now in order to consider amendment No. 8 printed in
part A of House Report 112-34.
Mrs. MALONEY. 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:
Add at the end the following new section:
SEC. 3. FINDINGS.
The Congress finds the following:
(1) As of January 2011, active trials and permanent Home
Affordable Modification Program (HAMP) modifications had been
initiated in all 50 States and the District of Columbia,
including--
(A) 4036 active trials and permanent HAMP modifications in
Alabama;
(B) 291 active trials and permanent HAMP modifications in
Alaska;
(C) 32159 active trials and permanent HAMP modifications in
Arizona;
(D) 1527 active trials and permanent HAMP modifications in
Arkansas;
(E) 161181 active trials and permanent HAMP modifications
in California;
(F) 9349 active trials and permanent HAMP modifications in
Colorado;
(G) 8604 active trials and permanent HAMP modifications in
Connecticut;
(H) 1166 active trials and permanent HAMP modifications in
the District of Columbia;
(I) 2130 active trials and permanent HAMP modifications in
Delaware;
(J) 82230 active trials and permanent HAMP modifications in
Florida;
(K) 25120 active trials and permanent HAMP modifications in
Georgia;
(L) 2656 active trials and permanent HAMP modifications in
Hawaii;
(M) 2640 active trials and permanent HAMP modifications in
Idaho;
(N) 36907 active trials and permanent HAMP modifications in
Illinois;
(O) 6785 active trials and permanent HAMP modifications in
Indiana;
(P) 1761 active trials and permanent HAMP modifications in
Iowa;
(Q) 1639 active trials and permanent HAMP modifications in
Kansas;
(R) 2622 active trials and permanent HAMP modifications in
Kentucky;
(S) 3774 active trials and permanent HAMP modifications in
Louisiana;
(T) 1925 active trials and permanent HAMP modifications in
Maine;
(U) 22028 active trials and permanent HAMP modifications in
Maryland;
(V) 17039 active trials and permanent HAMP modifications in
Massachusetts;
(W) 22716 active trials and permanent HAMP modifications in
Michigan;
(X) 12108 active trials and permanent HAMP modifications in
Minnesota;
(Y) 2641 active trials and permanent HAMP modifications in
Mississippi;
(Z) 7284 active trials and permanent HAMP modifications in
Missouri;
(AA) 764 active trials and permanent HAMP modifications in
Montana;
(BB) 917 active trials and permanent HAMP modifications in
Nebraska;
(CC) 17860 active trials and permanent HAMP modifications
in Nevada;
[[Page H2015]]
(DD) 3175 active trials and permanent HAMP modifications in
New Hampshire;
(EE) 22105 active trials and permanent HAMP modifications
in New Jersey;
(FF) 2190 active trials and permanent HAMP modifications in
New Mexico;
(GG) 30955 active trials and permanent HAMP modifications
in New York;
(HH) 12663 active trials and permanent HAMP modifications
in North Carolina;
(II) 116 active trials and permanent HAMP modifications in
North Dakota;
(JJ) 15379 active trials and permanent HAMP modifications
in Ohio;
(KK) 1624 active trials and permanent HAMP modifications in
Oklahoma;
(LL) 7452 active trials and permanent HAMP modifications in
Oregon;
(MM) 14302 active trials and permanent HAMP modifications
in Pennsylvania;
(NN) 3539 active trials and permanent HAMP modifications in
Rhode Island;
(OO) 6526 active trials and permanent HAMP modifications in
South Carolina;
(PP) 273 active trials and permanent HAMP modifications in
South Dakota;
(QQ) 7124 active trials and permanent HAMP modifications in
Tennessee;
(RR) 17961 active trials and permanent HAMP modifications
in Texas;
(SS) 6405 active trials and permanent HAMP modifications in
Utah;
(TT) 565 active trials and permanent HAMP modifications in
Vermont;
(UU) 16738 active trials and permanent HAMP modifications
in Virginia;
(VV) 13387 active trials and permanent HAMP modifications
in Washington;
(WW) 1040 active trials and permanent HAMP modifications in
West Virginia;
(XX) 6793 active trials and permanent HAMP modifications in
Wisconsin; and
(YY) 349 active trials and permanent HAMP modifications in
Wyoming.
(2) As of January 2011, 1,493,107 additional trial
modifications were started under the HAMP Program.
(3) As of January 2011, 607,607 additional permanent
modifications were started under the HAMP Program.
(4) By voting to terminate the Home Affordable Modification
Program without a suggested replacement, the Congress is
voting to terminate a program that may have helped to modify
an additional 2,867,420 delinquent mortgages in the United
States.
The CHAIR. Pursuant to House Resolution 170, the gentlewoman from New
York (Mrs. Maloney) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentlewoman from New York.
{time} 1640
Mrs. MALONEY. Mr. Chair, for everyone that cares about the issues of
poverty, housing, economic growth, and community life, the last couple
of weeks have brought some troubling news. Wednesday came the news that
purchases of new U.S. homes declined last month to the slowest pace on
record, and new home prices dropped to the lowest level since December,
2003. And yet over the past 2 weeks, House Republicans have said with
their votes again and again that their policy to help homeowners is to
just give up; to throw in the towel and to say that there's just
nothing that Congress can do or will do to address the problem to help
struggling American families. They have already voted to terminate
three Federal programs that help Americans who are struggling to stay
in their homes. And now we are considering yet another one that has
helped more than 32,000 New Yorkers stay in their homes--over 600,000
across our great country.
What bothers me is that they are leading the effort to eliminate
these programs, voting against them, and yet they have no plans of
their own to address the foreclosure crisis that is hurting
neighborhoods and disrupting lives throughout their country, like the
jobs bills they said they would have. We have yet to see them. The only
initiative to help housing is to eliminate the programs that are
already there.
The HAMP program has been successful in helping, as I said, over
600,000. And with over 30,000 mortgages modified each month nationally,
HAMP is continuing to provide relief to struggling families across this
country. My amendment will add findings to the bill with the number of
trial and permanent modifications stated under the HAMP program. The
findings will also state the number of seriously delinquent mortgages
in the U.S. that may be eligible for HAMP modifications but won't be
because the program is being terminated. I believe it is important for
the public to understand State by State the number of mortgages--the
number of families--who are still in their homes because of the HAMP
program. Families are saving an average of over $500 per month on their
mortgage payments. This amounts to nearly $5 billion in savings since
the program started. These are real families and real savings. If our
friends who have proposed to terminate this program want to talk about
savings, they should think about the number of people in these States
who have benefited from HAMP and are now saving money every single
month. They should also think about the number of seriously delinquent
mortgages out there that are on the verge of foreclosure. Currently,
over 2 million families in our country are in this situation. Many of
these could be eligible to participate in the HAMP program. But by
terminating it now, our friends are saying that these families are on
their own. The numbers speak for themselves, and I think it is
important that we highlight how we have helped families across this
country and how many more are not going to be helped or are not being
helped by terminating and closing this program.
So I urge my colleagues to support my amendment and to oppose the
underlying bill, and I will place in the Record a statement of
administration policy from the Executive Office of President Barack
Obama in support of the HAMP program, urging a ``no'' vote on the
efforts by the Republican majority.
Executive Office of the President, Office of Management
and Budget,
Washington, DC, March 29, 2011.
Statement of Administration Policy
H.R. 839--HAMP Termination Act
(Rep. McHenry, R-NC, and 8 cosponsor)
The Administration strongly opposes House passage of H.R.
839 which would eliminate the Department of the Treasury's
Home Affordable Modification Program (HAMP). This program
offers eligible homeowners an opportunity to lower their
mortgage payments, helping individuals avoid foreclosure and
leading to the protection of home values and the preservation
of homeownership. The Administration is committed to helping
struggling American homeowners stay in their homes, and has
taken many steps over the last two years to stabilize what
was a rapidly-declining housing market. As tens of thousands
of responsible American homeowners struggling with their
mortgages receive permanent assistance each month from HAMP,
the Administration believes that continuation of HAMP is
important to the Nation's sustained economic recovery.
If the President is presented with H.R. 839, his senior
advisors would recommend that he veto the bill.
____
Making Home Affordable Program
Servicer Performance Report Through January 2011
HAMP ACTIVITY BY STATE
----------------------------------------------------------------------------------------------------------------
Active Permanent % of
State Trials Modifications Total Total
----------------------------------------------------------------------------------------------------------------
AK............................................................... 63 228 291 0.0
AL............................................................... 927 3,109 4,036 0.6
AR............................................................... 337 1,190 1,527 0.2
AZ............................................................... 5,837 26,322 32,159 4.7
CA............................................................... 32,617 128,564 161,181 23.5
CO............................................................... 1,762 7,587 9,349 1.4
CT............................................................... 1,759 6,845 8,604 1.3
DC............................................................... 247 919 1,166 0.2
DE............................................................... 454 1,676 2,130 0.3
FL............................................................... 18,570 63,660 82,230 12.0
GA............................................................... 5,553 19,567 25,120 3.7
HI............................................................... 607 2,049 2,656 0.4
IA............................................................... 388 1,373 1,761 0.3
ID............................................................... 602 2,038 2,640 0.4
IL............................................................... 7,803 29,104 36,907 5.4
IN............................................................... 1,505 5,280 6,785 1.0
KS............................................................... 379 1,260 1,639 0.2
KY............................................................... 556 2,066 2,622 0.4
LA............................................................... 977 2,797 3,774 0.6
MA............................................................... 3,542 13,497 17,039 2.5
MD............................................................... 4,545 17,483 22,028 3.2
ME............................................................... 452 1,473 1,925 0.3
MI............................................................... 4,651 18,065 22,716 3.3
MN............................................................... 2,201 9,907 12,108 1.8
MO............................................................... 1,536 5,748 7,284 1.1
MS............................................................... 571 2,070 2,641 0.4
MT............................................................... 176 588 764 0.1
NC............................................................... 2,649 10,014 12,663 1.8
ND............................................................... 26 90 116 0.0
NE............................................................... 198 719 917 0.1
NH............................................................... 670 2,505 3,175 0.5
NJ............................................................... 4,738 17,367 22,105 3.2
NM............................................................... 476 1,714 2,190 0.3
NV............................................................... 3,697 14,163 17,860 2.6
NY............................................................... 7,022 23,933 30,955 4.5
OH............................................................... 3,325 12,054 15,379 2.2
OK............................................................... 401 1,223 1,624 0.2
OR............................................................... 1,547 5,905 7,452 1.1
PA............................................................... 3,124 11,178 14,302 2.1
RI............................................................... 719 2,820 3,539 0.5
SC............................................................... 1,377 5,149 6,526 1.0
SD............................................................... 66 207 273 0.0
TN............................................................... 1,601 5,523 7,124 1.0
TX............................................................... 4,381 13,580 17,961 2.6
UT............................................................... 1,330 5,075 6,405 0.9
VA............................................................... 3,364 13,374 16,738 2.4
VT............................................................... 125 440 565 0.1
WA............................................................... 2,927 10,460 13,387 2.0
WI............................................................... 1,474 5,319 6,793 1.0
WV............................................................... 209 831 1,040 0.2
WY............................................................... 61 288 349 0.1
Other*........................................................... 1,136 1,097 2,233 0.3
----------------------------------------------------------------------------------------------------------------
* Includes Guam, Puerto Rico and the U.S. Virgin Islands.
I reserve the balance of my time.
Mr. McHENRY. Mr. Chair, I rise in opposition to the amendment.
The CHAIR. The gentleman from North Carolina is recognized for 5
minutes.
[[Page H2016]]
Mr. McHENRY. Thank you, Mr. Chairman.
The amendment fails to highlight that there are more failed
modifications than successful permanent modifications. In fact, in the
dissenting views from the Financial Services Committee Democrats, of
which my colleague from New York (Mrs. Maloney) signed, along with 14
of her Democrat colleagues, it states that, in their view, 570,000
homeowners would be assisted under HAMP if the program were allowed to
continue. This amendment, however, states that that number is 2.8
million. This differs from the facts of her own party. And I think both
numbers are much higher than what have been agreed upon by the
Congressional Oversight Panel of TARP. Their numbers are much, much
lower.
I think if you use my colleague's words and figures, it's fair to say
that those are grossly inflated and go well beyond what is reasonable,
what is serious, and what is agreed upon in the private sector, or by
even most of her Democrat colleagues. So I would urge my colleagues to
vote against that.
I reserve the balance of my time.
Mrs. MALONEY. The number of over 2 million delinquent mortgages in
the United States is the range of people that could be eligible, who
could apply for the program, but not all of them would qualify. You
have to reach certain standards to qualify to enter the program. So
this is the range of the people who could be helped.
The difficulty with my Republican colleagues is that they have no
alternative. They're abolishing a program without coming forward with
any idea to help themselves. As Mark Zandi said in his recent report,
housing remains fragile in America. And housing is roughly 25 percent
of our economy. So to the extent that we can help people stay in their
homes, thereby not only helping that family but helping their community
and helping their country, helping to stabilize the housing prices
around that house so it doesn't become delinquent and abandoned,
pulling down the values in the communities, this is an important
program. And it should be continued. It's no taxpayer dollars used.
It's from the TARP program, funded by the banks. This is an effort to
help the overall economy.
The Acting CHAIR (Mr. Womack). The time of the gentlewoman from New
York has expired.
Mr. McHENRY. Mr. Chairman, in closing, I would quote from page 17 of
the dissenting views of the Financial Services Committee Democrats, of
which my colleague, Mrs. Maloney, signed on. Page 17, ``A reasonable
estimate is that the program participation will double by the end of
next year,'' which, I might add, is a bit ambitious. I'll just continue
with the quote. ``A reasonable estimate is that the program
participation will double by the end of next year, for a cumulative
total of 1.1 million homeowners. Based on this estimate, the bill would
deny modification for more than a half million homeowners at risk of
foreclosure.'' I might add, the statistics also bear out that for every
half a million that are helped in this program, you're actively hurting
about 800,000 Americans.
So what the opposition on the other side of the aisle is doing is
saying we should continue failure, we should endorse failure. In fact,
we should continue to hurt people by keeping this program open. And
that, under their view, it means that you'll have 800,000 Americans
that will be left worse off because this program exists--worse off.
Their credit depleted, their home taken, their credit rating destroyed.
I think that is highly inappropriate, Mr. Chairman. That's why I oppose
this amendment.
I yield the balance of my time to my colleague from Illinois (Mrs.
Biggert).
Mrs. BIGGERT. I thank the gentleman for yielding.
My colleague from New York and many of the colleagues from that side
of the aisle have been saying that if we end this program, there will
be nothing. That simply isn't true. Of the 4.1 million mortgage
modifications that were completed, 3.5 million were done by the private
sector with no government program and not a dime from the taxpayers.
There's also the Home Affordable Refinance Program, or HARP, for
homeowners with government-backed Fannie Mae and Freddie Mac loans. And
don't forget about the Hardest Hit Fund. According to the Treasury Web
site, the President established this in February, 2010, to provide
targeted aid to families in States hard hit by the economic and housing
market downturn. That includes $1.5 million that went to the hardest
hit States--California, Arizona, Florida, Nevada, and Michigan. Another
$600 million went to another set--North Carolina, Ohio, Rhode Island,
and South Carolina. And finally, $2 billion was distributed to 17
States and the District of Columbia.
{time} 1650
In 2008, $300 million in guarantees was committed for HOPE for
Homeowners, a voluntary FHA program. Only 200 loans have been modified
in this program, but it does exist; $475 million has been appropriated
to Neighborhood Works for foreclosure counseling for homeowners.
Finally, there are countless local, State, and private sector
initiatives.
We have to stop funding programs with money that we don't have. Let's
make that clear. With that, I would urge opposition to this amendment.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from New York (Mrs. Maloney).
The question was taken; and the Acting Chair announced that the noes
appeared to have it.
Mrs. MALONEY. Mr. Chairman, I demand a recorded vote.
The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentlewoman from New York
will be postponed.
Amendment No. 9 Offered by Ms. Loretta Sanchez of California
The Acting CHAIR. It is now in order to consider amendment No. 9
printed in part A of House Report 112-34.
Ms. LORETTA SANCHEZ of California. Mr. Chairman, I have an amendment
at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Add at the end the following new section:
SEC. 3. SENSE OF CONGRESS.
The Congress encourages banks to work with homeowners to
provide loan modifications to those that are eligible. The
Congress also encourages banks to work and assist homeowners
and prospective homeowners with foreclosure prevention
programs and information on loan modifications.
The Acting CHAIR. Pursuant to House Resolution 170, the gentlewoman
from California (Ms. Loretta Sanchez) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentlewoman from California.
Ms. LORETTA SANCHEZ of California. Mr. Chairman, I yield to the
gentleman from California (Mr. George Miller) for a unanimous consent
request.
(Mr. GEORGE MILLER of California asked and was given permission to
revise and extend his remarks.)
Mr. GEORGE MILLER of California. I thank the gentlewoman for
yielding.
Mr. Chairman, it is with great regret but with clear intent that I
rise in opposition to continuing the Federal Home Affordable
Modification Program, known as HAMP, without significant changes.
HAMP was designed to help millions of homeowners who had fallen
victim to the financial crisis of 2008 and to the collapse of the
housing market; but regrettably, at this time, it is not working under
its current structure.
On behalf of struggling homeowners in my congressional district
trying to avoid foreclosure and stay in their homes, I have gone to
great lengths to encourage the Obama administration to recognize the
serious shortcomings of the HAMP program, shortcomings that have been
well documented by numerous independent and authoritative sources.
But the administration has been unable to successfully respond to the
legitimate criticisms of HAMP and as a result the administration faces
opposition to its program today on the floor of the House not only from
those who oppose everything this administration does for purely
partisan reasons but also from representatives like me who have
genuinely sought to work with the administration to improve this
program.
I hope that my vote today is understood clearly by the administration
as one more effort on my part, on behalf of my desperate constituents,
to get the administration to recognize the urgency of the housing
crisis and
[[Page H2017]]
respond to it accordingly. I appreciate that much hard work has already
been done. I know that many people are involved in this effort and many
hours have been dedicated to the problem. But in the case of ongoing
foreclosures nationwide and the abuses homeowners face from banks and
mortgage servicers, all the hard work and effort has not been
sufficient and more must be done.
Homeowners in my community and across the country are being lied to,
chewed up, and abused by banks and servicers in an arbitrary and
capricious system that has stripped them of their homes and their
livelihoods. In my district, people who are in need of substantial help
in their fights against the big banks are simply not getting it. Hard
as I try with my staff, and hard as my colleagues try with their staff,
we cannot do enough on our own.
Make no mistake--Republicans in Washington are not on the side of
homeowners in this fight. They're using the problems with HAMP as an
excuse to once again oppose the Obama administration, just as they have
opposed the Obama administration on every step it has taken to rescue
the economy, for purely partisan reasons. Regrettably, the Republican
approach to the housing crisis is to cut and run, to starve the economy
of the investments it needs to create jobs and get the economy--and the
housing market--back on its feet. Their bill today does nothing to help
the housing crisis and it would deprive the administration of funds
that could be used to help homeowners. But their bill does one thing
that I do support--it sends a message that homeowners are not getting
the help they need from HAMP and that HAMP must be significantly
improved or replaced in order to offer the kind of help distressed
homeowners need.
So far, such improvements have not taken place. And I see no sign
that they will. And left with no choice but to register one more
complaint by voting to end HAMP.
I hope today's vote is understood clearly as a wake-up call to the
administration that HAMP is not good enough today to earn my support
and that it must be strengthened immediately or replaced by a program
that does work. I hope my vote sends the message that banks and
servicers are responsible for the abuse that is taking place in today's
housing market and that we intend to hold them accountable for their
behavior, and that we are committed to helping struggling homeowners
survive and recover from this crisis.
Ms. LORETTA SANCHEZ of California. Mr. Chairman, since my colleagues
on the other side of the aisle are ending the Home Affordable
Modification Program, my amendment simply states that the Congress
should encourage the banks to provide our qualifying neighbors with
loan modifications. It also encourages the banks to provide our friends
and families with information on foreclosure prevention and loan
modification.
My Republican colleagues say that the Home Affordable Modification
Program is not helping enough people. Well, it didn't help all the
people. That's true. I know people who went and tried to get their
loans modified, and it didn't work for them; but there have been quite
a few who have been helped. I want to give you some examples just in my
own area.
For example, there is this couple in Garden Grove, California. The
husband became unemployed. He was a construction worker; and as we all
know, construction was the first industry to fold. Well, the family
fell behind on their mortgage payments despite the fact that they are
extremely frugal and had been saving money for emergencies.
After some time, the husband found a job. Of course it paid less, and
they are still unable to pay their full mortgage. They owed $8,825 in
missed payments with late fees; plus, they had a balance of $482,000 on
their mortgage. Thanks to the modification program, the debts were
forgiven, and the balance was dropped by $87,000 so that they have a
new balance.
Even with the loss of income, they are very thankful that they can
keep their home and that they have a mortgage payment that they can
make. The Home Affordable Modification Program allowed this family to
keep their home.
A family from Santa Ana was close to losing their home due to
financial hardship as the husband's hours and income were reduced. So
to make ends meet, he supplemented his primary job with a part-time
job. These are not people who are asking for handouts. These are people
who are trying to figure out a way to hold onto their homes and to keep
stability with their children. The gentleman really wanted to keep his
home, so he worked with a counseling agency to formulate a budget that
was affordable to him. Thanks to the loan modification program, his
payment was reduced, and the family can stay in their home. That's one
more family in Santa Ana that is in their home today.
Then there was this couple who worked for a school district. The
budget restraints in the State forced them to have furloughs, which
took a significant toll on their income. There was a couple from
Anaheim who was using their unused sick and vacation days just so they
could get that check in order to make the mortgage. Thanks to the loan
modification program, the couple was able to permanently modify their
loan and keep their home. Their monthly mortgage payment was reduced,
and it made it more affordable. Even with an income reduction, this is
another couple, another family, who is still in their home.
Those are only three of the success stories we've had. I know I have
worked very hard with my housing agencies and with people in putting on
forums and talking to people and giving information and calling them in
and getting the banks to try to modify these loans. This is a 5-year
process at home that we have been working on. I don't know, maybe the
rest of my colleagues didn't do this or didn't know how to do it or
they weren't as successful, but we have had success. So we have
families who are in their homes.
It is my hope that my Republican colleagues will reconsider this
bill. Let's work together to find solutions for people because when you
keep families in their homes, the stability of the family stays intact;
and when you have that in particular, if you have children, they need
that stability.
I yield back the balance of my time.
Mrs. BIGGERT. Mr. Chairman, I rise in opposition to the amendment,
even though I am not opposed.
The Acting CHAIR. Without objection, the gentlewoman from Illinois is
recognized for 5 minutes.
There was no objection.
Mrs. BIGGERT. We will accept the amendment.
I have had similar occurrences in my district where actually one
gentleman had to pay back $42,000 worth of late fees as well as the
penalties and the difference between the loan modification. That's
where I think this program has failed.
Yet I think your amendment is a sense for Congress to encourage the
banks to work with our constituents and to provide loan modifications
to those who are eligible. It also encourages banks to work with our
constituents and to provide them with the best services. It encourages
the banks to assist prospective homeowners with foreclosure prevention
and counseling.
I think this is a help in the private sector and encourages the
private sector to do this, so we would accept this amendment.
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Loretta Sanchez).
The amendment was agreed to.
Mrs. BIGGERT. Mr. Chairman, I move that the Committee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
McHenry) having assumed the chair, Mr. Womack, Acting Chair of the
Committee of the Whole House on the state of the Union, reported that
that Committee, having had under consideration the bill (H.R. 839) to
amend the Emergency Economic Stabilization Act of 2008 to terminate the
authority of the Secretary of the Treasury to provide new assistance
under the Home Affordable Modification Program, while preserving
assistance to homeowners who were already extended an offer to
participate in the Program, either on a trial or permanent basis, had
come to no resolution thereon.
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