[Congressional Record (Bound Edition), Volume 157 (2011), Part 6]
[House]
[Pages 8551-8553]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        AMERICA'S HOUSING CRISIS

  The SPEAKER pro tempore. The Chair recognizes the gentlewoman from 
Ohio (Ms. Kaptur) for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, in 2008, gas prices that rose above $4 a 
gallon triggered the Wall Street meltdown and housing crisis that 
continue to plague our country. We're in the same boat today again with 
gas prices going over $4 a gallon, so be prepared.
  I rise today to talk about that housing crisis that is devaluing our 
housing stock across our country and destroying neighborhoods and 
communities across the Nation.
  Last week, the New York Times ran a piece I wish to place in the 
Record highlighting one more twist in this crisis. According to their 
front page expose, the big banks and mortgage companies have profited 
even more from the foreclosure crisis by amassing giant ``real estate 
empires'' that span across our country. So not only do six banks now 
control two-thirds of the banking system of this country, they've also 
become real estate magnates, too. When is too much too much?
  The impact on communities has been devastating. The numbers are 
simply shocking. In my community alone, over 6,700 more homes are in 
some type of foreclosure filings. While thousands of America's families 
are being thrown out on the street, the big Wall Street banks have 
nearly doubled the number of houses they've taken through foreclosure 
since the crisis began 5 years ago. That represents nearly 900,000 
homes. That's 900,000 more families whose American Dream ended in 
foreclosure.

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  Sadly, this doesn't include those who are barely hanging on. 
Approximately one in four mortgaged homes are still underwater, where 
families owe more than the home is worth.
  After taking billions of dollars from our taxpayers, we might expect 
that the Wall Street banks would want to help people stay in their 
homes and help more vacant properties be taken off the market. Well, 
that's not what I'm hearing from local realtors. I spoke with a group 
of them over a week ago. They keep running up against a brick wall any 
time they even try to do a workout with one of these banks. They 
continue to have difficulty accessing credit for qualified, willing 
buyers. More and more, I hear how it's only our local banks and our 
credit unions that are making any effort to make this troubled housing 
market function.
  Wall Street walked away with billions in bailout money, and then 
walked away from the housing mess they created. But they want even 
more. All the while they are sitting on top of huge profits and taking 
enormous tax breaks. The six largest banks in the country, including 
Wells Fargo, Bank of America and JPMorgan Chase, together paid an 
approximate tax rate of only 11 percent of their pretax U.S. earnings 
in 2009 and 2010, less than half of what other businesses pay. I wish 
someone in this place could explain why this is allowed to go on.
  We need to understand that this foreclosure crisis is far from over. 
In the first quarter of this year alone, approximately 215,000 more 
properties were in foreclosure across our country, and another 700,000 
properties were either in foreclosure filings, received default notice, 
bank repossession or scheduled auction. As these banks continue to 
agglomerate these properties that are becoming vacant, neighborhoods 
across our country are being devalued and continue to disintegrate. 
Every Member here knows what I'm talking about.
  There are some signs that our economy is slowly improving. But, boy, 
we aren't out of the woods yet. Moody's is predicting that housing 
prices across our Nation will continue to fall by as much as 5 percent 
by this year's end--I should say 5 percent more. We cannot sit on our 
hands and hope the situation gets better. Revival of the housing sector 
and the jobs it creates has always played a crucial and leading role in 
any economic recovery. We need to work to help struggling families stay 
in their homes, protect neighborhoods from being riddled with vacant 
structures and get our economy moving again by arresting the continuing 
decline in our vital housing assets built up over decades coast to 
coast.
  Importantly, revitalizing and reoccupying the troubled housing stock 
would put millions of Americans to work. And isn't it over time to do 
exactly that?

                [From the New York Times, May 22, 2011]

          As Lenders Hold Homes in Foreclosure, Sales Are Hurt

                             (By Eric Dash)

       El Mirage, AZ.--The nation's biggest banks and mortgage 
     lenders have steadily amassed real estate empires, acquiring 
     a glut of foreclosed homes that threatens to deepen the 
     housing slump and create a further drag on the economic 
     recovery.
       All told, they own more than 872,000 homes as a result of 
     the groundswell in foreclosures, almost twice as many as when 
     the financial crisis began in 2007, according to RealtyTrac, 
     a real estate data provider. In addition, they are in the 
     process of foreclosing on an additional one million homes and 
     are poised to take possession of several million more in the 
     years ahead.
       Five years after the housing market started teetering, 
     economists now worry that the rise in lender-owned homes 
     could create another vicious circle, in which the growing 
     inventory of distressed property further depresses home 
     values and leads to even more distressed sales. With the 
     spring home-selling season under way, real estate prices have 
     been declining across the country in recent months.
       ``It remains a heavy weight on the banking system,'' said 
     Mark Zandi, the chief economist of Moody's Analytics. 
     ``Housing prices are falling, and they are going to fall some 
     more.''
       Over all, economists project that it would take about three 
     years for lenders to sell their backlog of foreclosed homes. 
     As a result, home values nationally could fall 5 percent by 
     the end of 2011, according to Moody's, and rise only modestly 
     over the following year. Regions that were hardest hit by the 
     housing collapse and recession could take even longer to 
     recover--dealing yet another blow to a still-struggling 
     economy.
       Although sales have picked up a bit in the last few weeks, 
     banks and other lenders remain overwhelmed by the wave of 
     foreclosures. In Atlanta, lenders are repossessing eight 
     homes for each distressed home they sell, according to March 
     data from RealtyTrac. In Minneapolis, they are bringing in at 
     least six foreclosed homes for each they sell, and in once-
     hot markets like Chicago and Miami, the ratio still hovers 
     close to two to one.
       Before the housing implosion, the inflow and outflow 
     figures were typically one-to-one.
       The reasons for the backlog include inadequate staffs and 
     delays imposed by the lenders because of investigations into 
     foreclosure practices. The pileup could lead to $40 billion 
     in additional losses for banks and other lenders as they sell 
     houses at steep discounts over the next two years, according 
     to Trepp, a real estate research firm.
       ``These shops are under siege; it's just a tsunami of stuff 
     coming in,'' said Taj Bindra, who oversaw Washington Mutual's 
     servicing unit from 2004 to 2006 and now advises financial 
     institutions on risk management. ``Lenders have a strong 
     incentive to clear out inventory in a controlled and timely 
     manner, but if you had problems on the front end of the 
     foreclosure process, it should be no surprise you are having 
     problems on the back end.''
       A drive through the sprawling subdivisions outside Phoenix 
     shows the ravages of the real estate collapse. Here in this 
     working-class neighborhood of El Mirage, northwest of 
     Phoenix, rows of small stucco homes sprouted up during the 
     boom. Now block after block is pockmarked by properties with 
     overgrown shrubs, weeds and foreclosure notices tacked to the 
     doors. About 116 lender-owned homes are on the market or 
     under contract in El Mirage, according to local real estate 
     listings.
       But that's just a small fraction of what is to come. An 
     additional 491 houses are either sitting in the lenders' 
     inventory or are in the foreclosure process. On average, 
     homes in El Mirage sell for $65,300, down 75 percent from the 
     height of the boom in July 2006, according to the Cromford 
     Report, a Phoenix-area real estate data provider. Real estate 
     agents and market analysts say those ultra-cheap prices have 
     recently started attracting first-time buyers as well as 
     investors looking for several properties at once.
       Lenders have also been more willing to let distressed 
     borrowers sidestep foreclosure by selling homes for a loss. 
     That has accelerated the pace of sales in the area and even 
     caused prices to slowly rise in the last two months, but 
     realty agents worry about all the distressed homes that are 
     coming down the pike.
       ``My biggest fear right now is that the supply has been 
     artificially restricted,'' said Jayson Meyerovitz, a local 
     broker. ``They can't just sit there forever. If so many 
     houses hit the market, what is going to happen then?''
       The major lenders say they are not deliberately holding 
     back any foreclosed homes. They say that a long sales process 
     can stigmatize a property and ratchet up maintenance and 
     other costs. But they also do not want to unload properties 
     in a fire sale.
       ``If we are out there undercutting prices, we are 
     contributing to the downward spiral in market values,'' said 
     Eric Will, who oversees distressed home sales for Freddie 
     Mac. ``We want to make sure we are helping stabilize 
     communities.''
       The biggest reason for the backlog is that it takes longer 
     to sell foreclosed homes, currently an average of 176 days--
     and that's after the 400 days it takes for lenders to 
     foreclose. After drawing government scrutiny over improper 
     foreclosures practices last fall, many big lenders have 
     slowed their operations in order to check the paperwork, and 
     in two dozen or so states they halted them for months.
       Conscious of their image, many lenders have recently 
     started telling real estate agents to be more lenient to 
     renters who happen to live in a foreclosed home and give them 
     extra time to move out before changing the locks.
       ``Wells Fargo has sent me back knocking on doors two or 
     three times, offering to give renters money if they cooperate 
     with us,'' said Claude A. Worrell, a longtime real estate 
     agent from Minneapolis who specializes in selling bank-owned 
     property. ``It's a lot different than it used to be.''
       Realty agents and buyers say the lenders are simply 
     overwhelmed. Just as lenders were ill-prepared to handle the 
     flood of foreclosures, they do not have the staff and 
     infrastructure to manage and sell this much property.
       Most of the major lenders outsourced almost every part of 
     the process, be it sales or repairs. Some agents complain 
     that lender-owned home listings are routinely out of date, 
     that properties are overpriced by as much as 10 percent, and 
     that lenders take days or longer to accept an offer.
       The silver lining for home lenders, however, is that the 
     number of new foreclosures and recent borrowers falling 
     behind on their payments by three months or longer is 
     shrinking.

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       ``If they are able to manage through the next 12 to 18 
     months,'' said Mr. Zandi, the Moody's Analytics economist, 
     ``they will be in really good shape.''

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