Mr. Speaker, I rise today to support H. Res. 526, recognizing homeownership and responsible lending. As the Ranking Member of the House Committee on Financial Services Subcommittee on Housing and Community Opportunity, I want to thank Representative Cummings and Chairman Frank for working in a cooperative fashion to ensure that the language protects borrowers while preserving access to home ownership opportunities.
Over the past several years, the housing market has helped to drive the national economy, as Americans bought and refinanced homes in record numbers. The benefits of homeownership are undeniable and for this reason, there has been a significant focus on improving homeownership opportunities for everyone, including the lower-income borrower.
At the same time, the subprime market has flourished and provided credit to many families that may not have qualified under conventional standards, and today, this country enjoys record high homeownership rates.
More than 68 million Americans own a home. Of this 68 million, 50 million homeowners have a mortgage, and 13 million of them have a subprime loan. According to a recent Chicago Tribune article, “Subprime loans, often with adjustable rates, made homeownership possible for millions of Americans whose credit ratings or income levels made them ineligible for cheaper prime loans.”
However, of the 13 million subprime loans, roughly 5 percent of them are entering foreclosure. And, according to data released by the Mortgage Bankers Association, these numbers are on the rise. These mortgage foreclosure rates raise eyebrows and call into question what actions can be taken to help homeowners keep their homes. I would like to emphasize the word “action.”
While I believe that this resolution under consideration outlines many important facts, most of which Americans have seen printed in the news for months, it does not take action.
The resolution tells the House something that we already have the authority to do -- take action.
Americans are waiting for the leadership of this House to exercise that authority. We can talk about the increase in foreclosure rates until we’re blue in the face. Why is the leadership of this House waiting? The fact of the matter is that this body needs to join forces with our folks in the public and private sectors to take action immediately.
What is it we should be doing right now to ensure that those 650,000 homeowners -- and others who may follow – can keep their homes?
First, we can and should pass a Federal Housing Administration (FHA) modernization bill. I introduced H.R. 1752, the Expanding American Homeownership Act of 2007, a bill identical to the one that passed the House last July by a strong, bi-partisan vote of 415 to 7.
However, on the same day that I introduced my bill, two of my colleagues on the other side of the aisle introduced another FHA reform bill that includes a new and controversial housing trust fund provision. This trust fund provision has stalled the bill.
So while the other side of the aisle is holding out for a brand new trust fund, millions of Americans may lose their homes in 2007 because they did not have the refinancing option that a modernized FHA could have offered them.
In testimony before the House Financial Services Committee, U.S. Department of Housing and Urban Development (HUD) Assistant Secretary for Housing Brian D. Montgomery urged Congress to pass an FHA reform bill and said FHA could help hundreds of thousands of additional borrowers secure a safe and affordable mortgage. He said that the best thing to help subprime borrowers is to reform FHA, and he added that HUD is prepared to immediately implement FHA reforms.
Second, this resolution mentions -- but does not say how -- we can immediately increase opportunities for housing counseling, and it also says that we should raise public awareness. I think that, first, by advertising available resources, we can both raise public awareness and increase opportunities for housing counseling. It is crucial to promote financial literacy and educate our youth and adults. This is the most direct way of ensuring that consumers understand the terms of their loan so they may avoid predatory loans and foreclosure altogether.
I am pleased that on June 25th, NeighborWorks America and the Ad Council launched a national ad campaign aimed at preventing home foreclosure. Homeowners in trouble can try to save their homes by calling a hotline -- 888-995-HOPE -- a number provided by the Homeownership Preservation Foundation.
In addition, we have about 2,300 HUD-certified housing counseling agencies across the country. Americans should know that they can visit HUD’s website or call 800-569-4287 to find a HUD-certified counselor in their neighborhood. HUD-certified counselors can give straight-forward, and free or low-cost, advice to potential or existing homeowners about buying home, refinancing a mortgage, or preventing foreclosure.
Third, we need to address the root of the problems resulting from predatory or bad subprime loans. The federal regulators have recently stepped up to the plate and tried to address the increasing number of foreclosures through interagency guidance on subprime loans.
The guidance to mortgage lenders focuses on loans in the subprime market, particularly adjustable rate mortgage products. It specifies that a lender’s assessment of a consumer’s ability to repay should be based on the fully indexed rate, assuming a fully amortized repayment schedule.
The guidance also focuses on the need for clear and balanced communication to the borrower with regard to a mortgage loan’s benefits. I support these efforts, but there is much more to do. I know that the issue of mortgage fraud is hot in the Chicago area. We need to ensure that law enforcement has the necessary tools and resources to crack down on fraudulent activity.
Finally, I support this resolution because I agree with my colleagues on the importance of shedding some light on actions that Congress or federal regulators can take to help homeowners enter into realistic and affordable loans in the future. As we consider our options to take action at the federal level to help Americans keep and own homes, I would urge my colleagues to carefully weigh the potential consequences of such actions.
We should allow the secondary mortgage market to adjust to the rise in foreclosures accordingly and to continue to supply liquidity to the primary mortgage market. Simultaneously, we should take immediate action. We need to pass FHA modernization now. And we need to ensure that people continue to have immediate access to financial education and counseling, credit, and viable mortgage options so that people in future generations can realize the American dream of homeownership.
Thank you, Mr. Speaker. I yield back the balance of my time. |