[Congressional Record (Bound Edition), Volume 156 (2010), Part 7]
[House]
[Pages 8978-8979]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      RIGHT TO RENT ACT, H.R. 5028

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, in each of the last 14 years, Ohio has set a 
record for the number of foreclosures, and this year is on track to be 
no exception. Every year a new record. That is hard to imagine, and not 
what I want to say about my home State.
  Over the last 2 years, Congress has passed what I call hollow 
legislation that looks like it might stem the tide of foreclosures, but 
clearly the programs were not intended to work. Then, next, Treasury 
decided to make homes affordable, they say, by using some of the TARP 
bailout money, the Troubled Asset Relief Program that was passed back 
in the fall of 2008 to bail out the Wall Street speculative banks. 
According to The Wall Street Journal last week, of the handful of 
homeowners who have now been so-called ``helped'' by Treasury out of 
the millions and millions that are in trouble, even Treasury's reported 
that only one in four of the few helped to try to get their mortgage 
payment to be affordable have now been even more weeded out of that 
program. This is like the great shrinking blimp. You sort of promise 
them everything, but give them nothing, and the gas just drains right 
out of the balloon.
  The overall program in fact is voluntary and aimed to protect the 
investor, not the homeowner. People today who are in the program and 
trying to save their homes are depleting their savings so when they get 
kicked out of the administration's programs, they are more poor and 
assured of losing their homes and with little, if anything, to survive 
on. People are still losing their homes. We are not stemming the tide 
of foreclosures. You think somebody here in Washington would notice 
that.
  That's why I joined with my esteemed colleague, Representative Raul 
Grijalva, and introduced the Right to Rent Act of 2010, H.R. 5028. And 
we invite our colleagues to join us. This bill creates a right to rent 
for homeowners facing foreclosure. The bill is going to help a good 
portion of those 6 million delinquent homeowners transition from 
foreclosure to renting a home. And if communities are wise and adopt 
the old turnkey program, kind of resurrect that, then after 5 years if 
your payments are good you can end up owning your home, help to save 
our neighborhoods, save our communities by saving the families who 
don't deserve to be thrown out.
  Right to Rent would allow families to stay in their home and keep 
their family stable, while lowering the family's monthly housing costs 
by extending the term. In the meantime, the mortgage holder receives a 
fair market rent on their property. Keeping both families and mortgages 
stable strengthens communities rather than leaving homes barren and 
families on the street.
  In some communities in Ohio, entire neighborhoods are now vacant. Who 
does that help? Aiming relief directly at middle income homeowners, not 
speculators or people living in unaffordable mansions, the Right to 
Rent Act of 2010 allows homeowners facing foreclosure to stay in their 
homes at a fair market rent for 5 years.
  Specifically, to be eligible, the home must be a single-family 
property, a condominium with an undivided interest in common areas, or 
a similar dwelling in a multi-unit project that has been occupied for 
at least 2 years. The mortgage must have been originated before July 1, 
2007. Furthermore, the home must have been purchased at or below a 
median purchase price for the local metropolitan area as measured by 
the National Association of Realtors.
  The homeowner, upon receiving notice of foreclosure on an eligible 
property, has 25 business days to petition the court to exercise his or 
her right to rent the home for up to 5 years at a fair market rate as 
determined by a court-appointed independent appraiser. The bill does 
not change existing State foreclosure laws or landlord-tenant laws.
  In addition, the Secretary of Housing and Urban Development will 
monitor compliance with the program. In addition, this right to rent 
sunsets 5 years after date of enactment. It's not meant to be around 
forever.

                              {time}  1945

  Judges can transition middle-income family home foreclosures to 
rental agreements in a manner consistent with common sense and justice.
  Right to Rent is but one tool, a workable one, to address our 
Nation's housing crisis and help stabilize not only our community but 
also our Nation's mortgage economy.
  The Right to Rent provides a strong incentive for lenders to modify 
mortgages, including principal write-downs, to avoid becoming 
landlords. If the lender chooses to pursue foreclosure, the family can 
go to court to rent their

[[Page 8979]]

home, thus preventing the spiral of vacancy, social problems, crime, 
and lower property values in neighborhoods that follow mass vacancies.
  Right to Rent is backed by real world results. A model similar to 
H.R. 5028 is currently used on a limited basis by Fannie Mae and 
Freddie Mac.
  Mr. Speaker, I urge my colleagues to join me and Raul Grijalva in 
cosponsoring H.R. 5028 to stem the tide of foreclosures still sweeping 
across this country.

              [From the Wall Street Journal, May 18, 2010]

                     Loan Aid Leaves Some Worse Off


   One in Four in Government's Mortgage Program Is Dropped; Tales of 
                           Exhausted Savings

                         (By James R. Hagerty)

       The government's mortgage-modification program has left 
     some struggling homeowners worse off than they were before.
       The Treasury reported Monday that nearly one in four 
     homeowners who were offered lower payments under the Obama 
     administration's 15-month-old effort have been weeded out of 
     the program. Many people were removed from the trials because 
     they failed to make payments, didn't provide all the 
     financial documents needed to qualify or were found to be 
     ineligible.
       Homeowners are first offered trial modifications under the 
     program, which provides incentive payments to loan servicers, 
     investors and the homeowners. If borrowers make the payments 
     and satisfy other criteria, those trials are made permanent, 
     ensuring a cut in payments for five years.
       While awaiting answers, some borrowers keep making 
     payments, exhausting their savings in what may be a futile 
     effort to save their homes. They also incur fees from the 
     banks and delay taking action that might give them a fresh 
     start in a more affordable home.
       Some borrowers had unrealistic expectations about loan-
     relief programs, which were never designed to prevent all 
     foreclosures. Another big problem is that banks often take 
     six to 12 months to determine whether applicants are 
     eligible.
       ``I had to learn the hard way and deplete my savings doing 
     it,'' said Mia Parry, a manager at a mortgage brokerage in 
     Scottsdale, Ariz., who has spent nearly two years seeking a 
     loan modification. She now wishes she had put her home on the 
     market.
       Most struggling borrowers do benefit from seeking help, 
     said Aaron Horvath, a senior vice president at Springboard 
     Inc., a nonprofit counseling service based in Riverside, 
     Calif.
       Some win modifications, cutting monthly payments by 
     hundreds of dollars. Others who ultimately can't get 
     modifications at least are allowed to stay in their homes for 
     months, making either no payments or reduced payments.
       But ``if you're draining your savings'' in a vain effort to 
     hang onto a home, he said, you may end up worse off.
       Eager for quick results, the Obama administration last year 
     prodded banks to start people on trials without first 
     obtaining documents proving they were eligible. That has led 
     to many crushed hopes. The Treasury earlier this year changed 
     its rules and told banks to start trials only after getting 
     documents that proved borrowers qualified.
       The Treasury said in a monthly report on the government's 
     $50 billion Home Affordable Modification Program, or HAMP, 
     that about 1.2 million trial modifications had been started 
     under the plan, and about 281,000 borrowers had washed out by 
     the end of April.
       Only about 30 percent of borrowers who seek help from the 
     main foreclosure-prevention counseling program at 
     Neighborhood Housing Services of South Florida end up with 
     modifications, said LeeAnn Robinson, chief operating officer 
     of the Miami-based nonprofit Many borrowers don't have enough 
     income to support even reduced loan payments; others give up 
     before completing the paperwork.
       On average, it takes seven months to resolve a borrower's 
     situation, up from four months a year ago, Ms. Robinson said. 
     Banks and other loan servicers can't keep up with the demand 
     for help, she said.
       Ms. Parry bought a home in Phoenix in 2005 for $535,000, 
     but she believes it now would sell for around $250,000. She 
     has been seeking a modification from a unit of Citigroup 
     Inc., the servicer of her two mortgage loans, since June 
     2008.
       Ms. Parry's application was turned down in late 2008, but 
     President Obama's announcement of HAMP in February 2009 
     rekindled her hopes. Ms. Parry decided to keep making 
     payments on her loans because she expected to qualify for 
     this new program.
       Citigroup started her on a HAMP trial in June 2009, and she 
     made three payments. Then Citigroup told her there had been a 
     mistake and she would need to go through another three-month 
     trial.
       At the end of that second trial, Ms. Parry said, Citigroup 
     told her the investor that owned her first mortgage wasn't 
     participating in HAMP, so she couldn't get a modification 
     under that plan. During her trial period, Citigroup charged 
     her more than $1,300 of ``late charges'' and ``delinquency 
     expenses,'' she said.
       Ms. Parry said Citigroup should have been able to determine 
     that the investor wasn't participating before she went 
     through the trial. Citigroup recently offered her another 
     type of modification that she said fell short of the HAMP 
     formula and wouldn't lower her costs enough to make keeping 
     the home worthwhile. Unless Citigroup improves the offer, she 
     will try to sell the home.
       A Citigroup spokesman said: ``We have worked diligently 
     with the borrower and the investor in an effort to find a 
     solution that meets both the borrower's needs and the 
     investor's requirements.''
       Martha Wright, a marketing executive whose income has 
     dropped in recent years, has been trying since February 2009 
     to work out a deal with J.P. Morgan Chase & Co., the bank 
     that services the $1.1 million mortgage on her Avalon, N.J. 
     home.
       The bank denied her request last summer, but Ms. Wright 
     said she kept trying because the responses from the bank were 
     unclear and inconsistent, and she believed she still might 
     qualify. Meanwhile, she said, by continuing to make payments, 
     she cut her nonretirement savings to about $500 from $63,000 
     in early 2009.
       A spokesman for J.P. Morgan said the bank told Ms. Wright 
     on three occasions that she didn't qualify for a 
     modification. ``Modifying the loan would produce less value 
     to the loan's owner than foreclosing,'' he said.

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