| Washington, D.C. - Today, Congressman Sherman voted for a package of housing and tax bills that will provide crucial relief from foreclosure to many San Fernando Valley homeowners who are struggling to pay their mortgage loans. The package will also help to stabilize the housing finance market and the economy. He made the following statement:
“This bill is a compromise, and we are not getting everything that the House wanted. For example, I hope that next year we will revisit permanently increasing the loan limits in high cost areas to the $729,750 level currently in effect for 2008, rather than the $625,500 ceiling in this bill. Nonetheless, this bill is a tremendous achievement. If it becomes law, we will help literally hundreds of thousands of families who are facing foreclosure to keep their homes.
“By helping qualified borrowers to refinance into an FHA insured loan that they can afford based on the current appraised value of their home while allowing their current lenders to receive more than they would realize through a foreclosure, we create a “win-win” proposition for the borrower and the lender. We also protect neighborhoods from the reduced property values that occur in areas with many foreclosures. From now on, under the bill’s prudent underwriting standards, lenders will only be able to make loans that a borrower has a reasonable ability to repay.
“We create a new independent world class regulator to ensure the safety and soundness of Fannie Mae and Freddie Mac without compromising their mission of facilitating the availability of affordable home financing. The bill also provides stand-by authority for the Treasury Department to make loans or equity investments in Fannie and Freddie for a limited period if required to preserve their safety and soundness.
“I am pleased that the bill includes important safeguards for the taxpayers that I suggested, such as controls on executive compensation and directions for the Treasury Department to restrict dividends and seek a preferred payment position before other shareholders in the event that Treasury makes loans or takes an equity position in one or more of the GSEs.
“While there are certainly risks to establishing a Federal backstop for Fannie Mae and Freddie Mac, these risks pale in relation to the damage that would result if we do nothing and these entities were to fail.”
This package now goes to the Senate. Once the Senate passes it, the bill will go to the President, who is expected to sign it.
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