[Congressional Record (Bound Edition), Volume 155 (2009), Part 9]
[House]
[Pages 11452-11453]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          RISING FORECLOSURES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Madam Speaker, as unemployment in community after 
community rises to double digits, and foreclosures similarly rise, Wall 
Street is at it again, milking both ends of the foreclosure debacle.
  As many of the banks who volunteered to do foreclosure moratoriums, 
along with Freddie Mac and Fannie Mae, have ended those moratoriums, 
foreclosures are rising again and expected to continue to rise even 
with administration programs up and running. Between the first of this 
year and April 22, in my home county of Lucas, the major county I 
represent, 442 foreclosed properties have been sold.
  Now, would you think that's good? Who do you think is buying those 
homes? The very same institutions that made the liars' loans and

[[Page 11453]]

subprime loans in the first place, Deutsche Bank, followed by 
Citigroup, by Wells Fargo, by U.S. Bank, Fifth Third and JPMorgan 
Chase, HSBC, you know the names, or their subsidiaries.
  So, they foreclose, they buy, then they sell, pulling profit each 
step of the way, while destroying neighborhood after neighborhood, 
community after community in their wake.
  When are we going to stop letting Wall Street make money coming and 
going while people lose their homes and our communities are destroyed?

                              {time}  1930

  Now, who do they sell to? That's interesting. All to absentee 
investors who don't care or don't even know where we reside. Absentee 
investors across our country and, in many cases, across the world.
  Of the 442 properties sold--get ready for this--93 percent--93 
percent--were sold to banks or to absentee investors. I don't call that 
community reinvestment. I call that community disemboweling, community 
disinvestment.
  These buyers have no connection to Ohio or our community. They have 
no tie to our people. They merely seek to make more profit off the 
anguish of places such as where we reside, through the foreclosure 
process, as unemployment skyrockets. Communities do not have the tools 
to defend themselves from this predatory pillage.
  Realtors from our district are telling us that the same banks 
purposely are slowing down short sales of properties, pushing off 
sellers, and leaving properties vacant. Why? To make more money again.
  Federal policy should support Main Street families regaining equity 
and hope. Wall Street is rigging every transaction to laden their 
pockets--at the expense of the very taxpayers that supported them when 
they were crashing, and continue to support them as they stabilize. 
Business as usual for Wall Street--never doing for others, but 
profiting at everyone else's expense.
  Foreclosures weaken communities. Absentee investors do the same. We 
see home prices fall, which leads to more foreclosures as communities 
weaken and mortgages go underwater. People in communities are drowning 
across this country. To jump in and save them will require creative, 
big picture-thinking that goes beyond the gains of these big banks or 
the silos of governmental programs and goes beyond the benefit of one 
institution over another.
  We must let the FDIC and SEC deal with troubled banks and their 
ledgers and our financial system as they are designed to operate. Any 
Federal agency that deals with housing and foreclosures and jobs must 
join forces in designing funding mechanisms to radically transform the 
most hard-hit communities across our country. I would start with those 
that are now at double-digit in unemployment and foreclosures. Saving 
them will save more than just those communities. It will begin to 
breathe life back into our Nation's economy.
  It's time Main Street was put ahead of Wall Street. And it's time 
that this Congress paid attention to what is happening coast-to-coast.
  I will place in the Record material from the New York Times of this 
week.

                 [From the New York Times, May 4, 2009]

                      As Foreclosures Surge . . .

       The Obama administration sat by last week as 12 Senate 
     Democrats joined 39 Senate Republicans to block a vote on an 
     amendment that would have allowed bankruptcy judges to modify 
     troubled mortgages.
       Senator Obama campaigned on the provision. And President 
     Obama made its passage part of his antiforeclosure plan. It 
     would have been a very useful prod to get lenders to rework 
     bad loans rather than leaving the modification to a judge.
       But when the time came to stand up to the banking lobbies 
     and cajole yes votes from reluctant senators--the White House 
     didn't. When the measure failed, there wasn't even a 
     statement of regret.
       Mr. Obama's plan to keep struggling Americans in their 
     homes now relies on lenders to voluntarily rework bad loans. 
     The plan provides ample incentives, including payments to 
     servicers who successfully modify loans and, in some cases, 
     payments to mortgage investors who agree to modifications. 
     Whether that will be enough remains to be seen.
       The administration estimates that its plan will prevent 
     three million to four million foreclosures, but it will take 
     several months before there is enough data to evaluate. In 
     the past, however, voluntary modifications have failed to 
     curb the rise in foreclosures. The number of foreclosure 
     filings in March was very high, with estimates between 
     290,000 and 341,000.
       Even if lenders do agree to modify loans, many Americans 
     will still be in trouble. That's because nearly 14 million 
     homeowners are ``under water''--they owe more on their 
     mortgages than their homes are worth.
       In a bankruptcy, such homeowners would likely have their 
     loan principal reduced, lowering their payments and helping 
     them to rebuild equity. In a typical voluntary loan 
     modification, however, the monthly payment is reduced, but 
     not the principal. That puts under-water borrowers at high 
     risk of redefault, because there is no equity to fall back on 
     if a financial setback leaves them unable to make mortgage 
     payments.
       The negative feedback loop--foreclosures beget falling home 
     prices, which beget foreclosures, further weakening the 
     banks--is well under way. We hope the president's plan can 
     break the loop, but without bankruptcy reform it is going to 
     be a lot harder.

  In fact, last week we lost what one can say was a final hope for some 
Americans. With their mortgage completely underwater, credit card bills 
unpaid, home heating or cooling bills unpaid, healthcare bills unpaid 
and less food on the table . . . they turn to bankruptcy. This is the 
last chance and last hope for people who have tried everything else 
humanly possible to crawl out from under their debt. The decision is 
hard. Their hearts and souls demoralized, they turn to bankruptcy.
  Currently, bankruptcy does not include dealing with one's primary 
residence. The House passed bill H.R. 1106 included ``cramdown'' 
provisions. Not ideal. Not what anyone wants to do, but a tool to help 
some of the most desperate Americans settle debts and begin again.
  No such luck . . . the amendment in the Senate to achieve such a path 
was defeated. The New York Times editorial harkens this to a negative 
feedback loop. . . .

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