April 10, 2008

Congressman Gregory W. Meeks Lauds Financial Services Committee Hearing on Economic, Mortgage and Housing Rescue Bill

(WASHINGTON, DC)–Congressman Gregory W. Meeks (NY-6) lauded the House Financial Services Committee hearing on the economic, mortgage and housing rescue plan announced by the Committee’s Democratic Majority last week. The two day hearing held on April 9th and 10th included federal regulators, academics, economists and representatives of the cities and communities that are being negatively impacted by high numbers of foreclosures. Witnesses were asked to discuss the proposal and to provide suggestions to the committee.

“Our nation and this Congress are in uncharted territory with respect to the challenges facing our economy. My colleagues and I in the Majority on the House Committee on Financial Services will be seeking input from a wide range of experts as we work to properly address this crisis,” said Rep. Meeks.

The Congressman added, “the legislative proposal, which Chairman Barney Frank (MA-4) outlined at a March 14th press conference with Senator Chris Dodd (CT), seeks to stem the significant rise in mortgage foreclosures by allowing the Federal Housing Administration (FHA) to insure refinanced mortgages that have been significantly written down by mortgage holders and lenders. I believe this is a positive step and I intend to work vigorously on this measure to help homeowners who are in financial dire straits in New York’s 6th Congressional District.”

Additionally, the proposal will allow for the bulk refinance and guarantee troubled loans and provide loans and grants to communities to purchase and return to occupancy vacant foreclosed homes.

The measure contains three major components:

•Permits FHA to provide [up to $300 billion] in new guarantees that would help to refinance at-risk borrowers into viable mortgages. In exchange for the agreeing to a substantial write-down of principal, the existing lender or mortgage holder would receive a short payment from the proceeds of a new FHA guaranteed loan if the restructured loan would result in terms that the borrower can reasonably be expected to pay. The existing lender or mortgage holder no further credit exposure to the borrower. This could potentially refinance between 1 and 2 million loans (and help these families stay in their homes), protect neighborhoods and help stabilize the housing market.

•Permits the loan program to be used to refinance and guarantee mortgages through a facility that would provide for auction or other mechanism to refinance loans on a bulk basis.

•Provides $10 billion in loans and grants for the purchase and rehabilitation of vacant, foreclosed homes with the goal of occupying them as soon as possible.

A detailed summary and the legislative text can be found on the Financial Services Committee website at http://financialservices.house.gov/FHA.html.

Witnesses testifying at the hearing included high ranking officials from the Federal Deposit Insurance Corporation, the Comptroller, Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Board of Governors of the Federal Reserve System, the United States Department of Housing and Urban Development and noted economists.

“This is among the single most important issues facing the Congress. My district has been ravaged by the mortgage meltdown and I have an obligation to do all that I can to help my constituents,” said Congressman Meeks.

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