Health Insurance Tax Relief Act of 2007

Madam Chairman, on the question of this GAO report, I believe it is a reasonable request because I am confident it will come back in support of our bill. And I think it is entirely reasonable to ask them to start, without waiting for passage of the whole bill in both Houses.

Yes. Well, actually, final passage of the bill is going to, I hope, happen in a couple of hours in the House; but before it gets to the Senate, without waiting for the Senate, yes.

Madam Chairman, I rise in opposition.

And I will yield 2 minutes to the gentlewoman from California (Ms. Lee).

I yield myself 1 minute to comment on what the gentlewoman has said because we've agreed to the gentleman's amendment, so we're on some other subjects now.

What I would say is this: I would want to stress with regard, for instance, to ability to pay and jeopardizing the right of the homeowner, nothing in this bill in any way diminishes State remedies regarding ability to pay on prime loans. That's the argument, that we do not deal with the ability to pay on prime loans, et cetera. But the effect of that is that any remedy a State wants to pursue against the originator of the loan or the lender remains unimpeded. So we did want to make that point.

And just to say also, with regard to the incentive to charge more, the gentleman from North Carolina (Mr. Miller) and I discussed that. It will be very clear to anybody by the time this bill becomes law that there is no possibility of anyone being given higher compensation in return for getting people into a more expensive loan.

As to preemption, there will be some. There are people who want none at all. I do not think you could have a secondary market if there were no preemption. But we have already, in the manager's amendment, defined it, and I think reassured people that, for instance, fraud, deception, et cetera, that causes arising out of that will not be preempted.

I now yield the remaining time to the gentlewoman from Texas (Ms. Jackson-Lee).

I will say on this, as on a number of other issues, I will say very sincerely that the gentleman from North Carolina has persuaded me. I think he has clearly identified an issue that needs some further work. And as we go forward, ultimately to get this bill done, I would hope that we can work together on this.

Madam Chairman, I claim the time in opposition, not in opposition although there is going to be a secondary amendment.

Madam Chairman, will the gentleman yield?

I would be glad, Madam Chairman, to give the gentleman my assurance. And we can't all, when we see these things, know it's exactly right. If as we go forward, assuming the secondary amendment and the primary amendment are adopted, if the gentleman needs some further clarification of questions that we can deal with between now and the time of the final bill, we are open to continue those discussions.

Mr. Chairman, I claim the time that is set aside for someone in opposition since no one is.

I appreciate the gentlewoman coming forward. She has on this and other occasions played a very constructive role in helping us work things out. We have already done this for the Veterans Administration, Department of Veterans Affairs. Yes, in fact, it is our hope to get more people into the FHA program as an alternative to subprime. One of the things we've done, and the Senate is now doing it, is to extend the FHA's reach to people with subprime; although I do want to remind my friends in the Senate, I feel very strongly that when we do that, it would be terrible social policy to make people with weaker credit who are faithfully making their payments pay more than other people, and we will deal with that as we work out the two bills.

But for purposes of this bill, the gentlewoman is absolutely correct. So I intend to support her amendment.

And that leaves me with some extra time, so I would now yield 2 minutes to the gentleman from California, a member of the committee.

(Mr. BACA asked and was given permission to revise and extend his remarks.)

Mr. Chairman, I yield my remaining time to the gentleman from Oregon.

Will the gentleman yield to me?

As I said to my friend from Louisiana, I know everybody can't hear everything. He defends against an accusation that was not made when he said, Don't say they are all up to no good. Several of us on this side have explicitly said that we believe the majority are well-intentioned. The problem, I think, is that where there are people who are not well-intentioned, there are no rules to stop them. But we did on several occasions quite say the opposite of what the gentleman said we shouldn't have said.

Mr. Chairman, I offer an amendment.

Yes, I am.

Mr. Chairman, I offer this amendment, but I do not intend to push it today. I will be withdrawing it with the consent of the body. I was not as careful as I should have been in supervising or making clear my intentions in what I wanted. I do believe one of the two most controversial items in this is preemption. Very few people think we have done preemption just right. Fortunately, a lot of us are here. A lot of other people think we have done too much or too little.

The question of preemption is really twofold: one, should you preempt; and, secondly, having preempted, having prevented the State from acting, have you put sufficient rules in there to defer bad behavior. I think we probably didn't, as I read this over. That is, I think we have preempted, as we have clarified it, the right amount: not too much and not too little. But we have not put into the preemption enough in terms of deterrence.

We do have the policies and procedures in the safe harbor exemption. But what I think we should have and what this amendment was meant to embody is the ability of aggrieved parties or representatives, Attorneys General of the States, others, to go to the regulator of the entity in question and say, Look, there's been this pattern of abuse. When we have a pattern of abuse, you act.

We did not want to make the liability for any one violation too heavy. We didn't want to overkill. But we then would run into the problem the gentleman from North Carolina talked about, where violations at a moderate level of penalty could be simply a cost of doing business. So having a pattern and practice approach in here prevents people from treating a moderate penalty from simply being a cost of doing business.

It was drafted more than I had intended. That is my fault. I should have been paying more attention. I do not think originators ought to be covered in this, certainly not with a $1 million limitation.

So for that reason I am going to offer this and say that I hope to withdraw it now and work on it further.

I would yield to my friend from Colorado who is one of those who brought some of the problems here to my attention.

Let me take back my time. The gentleman raised that issue.

The gentleman from Texas (Mr. Marchant) raised an issue on renter protection. So you cannot be the homeowner being foreclosed upon and then get the rights of a tenant. The gentleman from Colorado had a further point, which is in those cases where there was a very specific prohibition in the loan against rental, that should not be overcome by what we do.

I would yield the remainder of my time to the gentleman from North Carolina.

Let me take back the time. The gentleman has underlined an important point. We are going to see this back again in somewhat buffed-up form. It goes to the regulators, so this isn't going to lead to court. It is not an explosion of litigation. It would allow a range of people to bring it, including State Attorneys General, but it would be brought to the regulator, someone familiar with that business model and an entity able to discriminate between good and bad practices.

I ask unanimous consent to withdraw the amendment.

I thank the gentleman from Maryland.

This is a very complicated subject. It involves a number of moving parts.

At every stage, and we said this from the beginning, at every stage in this bill, from the bill's introduction to the hearing to the markup to now, it has been improved. No one really knew enough. We are in a somewhat unknown area.

I would also say ultimately, I think, if we're going to get any legislation here, as I said before, we are going to get a bill that no single Member of this House likes in every particular because we are going to have to work together.

The gentleman from Maryland has identified one more area where we believe improvement can go forward. It is a subject that has to be refined some. This is the end of the session. We are getting legislation drafted. It can't always be done as carefully as we would like.

I appreciate the gentleman calling this to our attention; and in the bipartisanship spirit we have had, I believe we can continue to work on this, and by the time this bill is finally ready to be signed, we can include the thrust of what the gentleman is trying to accomplish.

Mr. Chairman, will the gentlewoman yield?

I want to thank the gentlewoman. She has been very diligent and called to the attention of the committee some of the concerns of the Attorney General of Ohio, with whom she has been working, as have her other Ohio colleagues. I appreciate this particular amendment and also the willingness of the gentlewoman to work with us as we continue to make this a better bill. I hope her amendment is adopted.

Mr. Speaker, I rise in opposition to the motion to recommit.

We have, from time to time, debated the issue as to whether or not we could make sure that no one who is not a legal resident or a citizen could qualify, but that's not what we're debating today. Let me read from page 2.

There are four kinds of identification that you must show. By the way, the mortgage industry and the real estate industry will not like the further paperwork here, but listen to this, lines 14 and 15, ``You must show a passport issued by the United States or a foreign government.'' Now, what makes anyone think that people who are in the United States with a foreign passport are here legally? They have foreign passports from other countries.

I think the problem is some on the other side have taken the word ``alien'' too literally, that is, they think an alien is someone who's not from the Earth. Because someone who is in America illegally who is from the Earth might have an Iranian passport or a Venezuelan passport or a Burmese passport.

So understand, what I think is happening is this. I've been seeing these a lot. I do a lot of recommits; it's a heck of a way to spend your life, but that's my job. This foreign government passport is new. I think what happened was this. I think the real estate industry, this is literally my speculation, the real estate industry said to the Republicans, Hey, wait a minute, we make a lot of money selling houses to foreigners. Don't cut out the foreigners.

But you forgot to say legal foreigners. This is what this bill says. So you may have some Americans who don't have all this ID, who don't have a passport, who don't live in a REAL ID State. They may not have this. They may have a driver's license that they can use and it's not a REAL ID State.

An American in a REAL ID State who doesn't have a passport can't make it. But an Iranian with an Iranian passport, Welcome to my home. Here's your mortgage.

Now, I understand the impulse to prevent illegal aliens from getting predatory mortgages. That's a very kind thing that the Republicans want to do for them. But they don't do it competently. Read the bill. It says if you have a foreign passport, you qualify. You vote for this and you will be favoring people from other countries who are here illegally over Americans who don't have a passport and don't live in a REAL ID State. Now, that's irrefutable.

In your desire to further the profitability of the real estate industry, and a lot of them are my friends and I have nothing against their profitability, but why would we want to vote for a recommit that elevates a foreigner who has no legal right to be in the United States and say they can qualify under this recommit, but an American who doesn't have a passport and doesn't live in a REAL ID State, has a driver's license and therefore didn't think they needed something, they wouldn't qualify. So we say to Americans, if you happen to be American, you had better get a passport and, now, it could be a Venezuelan passport, could be a Canadian passport, we don't care where it's from, just get a passport. I am baffled by this and I just think somebody didn't think this one through.

The point is that this recommit says nothing about restricting the mortgage process to people who are here only legally, because if you really think that people who are here illegally don't have a foreign passport, then you don't understand the situation.

So I say let's reject this effort to elevate foreign passports from people who may be here illegally over Americans who happen to not live in a REAL ID State and reject this recommit.

Mr. Speaker, I yield back the balance of my time.

Madam Chairman, I offer an amendment.

Madam Chairman, this amendment, on its face, is very, very simple, although I expect there will be some controversy about it. The amendment simply changes one word. The word is ``or.'' We change the word to ``and'' in the bill instead. You would think that would be noncontroversial, but let me get into the effect of that.

Currently, if an assignee of a mortgage has policies and procedures not to buy subprime loans that do not meet safe harbor provisions that are in this bill, or if the assignee is willing to cure such loans, the assignee has no liability until you get to a foreclosure situation. That's very complicated, I understand; but that's what the bill provides.

The effect of the amendment would be to require the assignee to have policies and procedures in place and do certain things and be willing to cure the loan to avoid being liable for rescission.

That's important because if you give the option to an assignee of either curing or having policies and practices that are responsible in place, an assignee can then just treat the cure as a cost of doing business, and it becomes an ineffective choice. But if they are obligated to both have the policies and procedures and protections in place, and be willing to cure the loan, then they are not going to exercise the option to do the least onerous one of those things.

It is a simple provision, a simple change, although I understand the arguments against it.

And I will, having created the framework and explained what we are trying to do, reserve the balance of my time.

Madam Chairman, I reserve the balance of my time.

I yield myself the balance of the time, and I assure you, I won't use it.

The arguments that have been made are absolutely correct with respect to 99 \44/100\ percent of the people operating in the market. These are not bad people. But this bill was drawn to get at that small percentage of the market that is out of control. And if you give that small percentage of the market the option of either doing some paperwork or curing, as opposed to having to do both of those things, I guarantee you they will take the option that is most cost beneficial to them. And

that's what we've been trying to stop, those people in the marketplace who are out of control. And that's what this amendment is designed to do.

For the rest of the market, it really won't have any impact at all because they're going to put procedures in place and they are going to be willing to cure, if that's the last resort.

So, I think, unfortunately, there are players in this market that have been out of control. This bill is designed to deal with them, and this amendment would help disincentivize them being out of control without harming anybody else. I would encourage my colleagues to support it.

Madam Chairman, I yield back the balance of my time.

Madam Chair, you may not have to recognize anybody in opposition to this amendment because I plan to offer it and then withdraw it. But I think I would be remiss not to discuss the issue because of two reasons: Number one, it needs to be discussed because of the very difficult, delicate balance that the Chair has been able to walk to get us to this point; and number two, to illustrate once again that when you allow good things to happen in the marketplace, some people in the marketplace will abuse them. And trying to get the right balance to encourage good things to happen in the marketplace and not discourage that from happening opens up, sometimes, the possibility that people who are not well intentioned will engage in activities that need to be prevented. And this is the classic case of that.

Basically, the bill now presumes that we meet the ability to repay a loan and provide net tangible benefit to a borrower if it is not a subprime loan. If it is a prime loan in the marketplace right now, that interest rate is 8.25 percent, so anything below that we presume to be a good loan.

The market now has done this. They've made available in the market a loan that defers interest and principal. And that is a good thing for about 90 percent of the people, maybe even more than that, who have the ability to do that. I'm the classic example of that. I have a loan in which I can defer for a period of time both the interest and the principal on the loan. But if you make that kind of loan available to somebody who doesn't have the income level that is sufficient

to pay it, under this bill, they can't even go back and offer proof that you shouldn't have done that, because we presumed, irrefutably presumed, that this is a good loan. And so the amendment that I was trying to craft and offer would have tried to close that. The problem is, if I close it for the bad people, then I also close it for the good people.

And so, as an alternative to proceeding with the amendment, I have convinced the Chair, I hope, that we will continue to work on this issue and find a way to stop the bad people from making these kinds of loans or abusing the process without penalizing the people who really deserve and should have these kinds of loans, which I acknowledged from the very beginning serve a useful place in the marketplace.

I yield to the chairman of the committee.

And that's all I wish to have acknowledged, and to demonstrate to everybody who is listening, really, that this has been a difficult issue, because just about any kind of loan that can be made in the marketplace, somebody can benefit from.

But when you have a loan that is particularly subject to being abused, you have to have rules to constrain it.

Madam Chairman, I ask unanimous consent to withdraw my amendment.

Madam Chairman, I have a secondary amendment to the Hensarling amendment at the desk which has been made in order under the rule.

Madam Chairman, my good friend Mr. Hensarling may be surprised to know that we actually agree very much with the spirit of what he is trying to do. And I am not sure that my amendment will absolutely cure all of the concerns we have with it, but it will certainly make it better, and we will continue to work on trying to really address the issue.

We don't want anybody to walk in and give false information on an application for a loan. One of the reasons we fought so hard to protect State laws

and not to preempt all State laws is because that would be fraud and we think it would be outrageous, it would be shyster. But as everything, there is another side to this, and I will illustrate it with a loan that I just recently closed myself, a loan that was made to me.

I submitted the application. I submitted the financial information. And what happened after that was that because the lender wanted their own form, they took my information that I had submitted to them and put it on their own form. They handed it back to me in a stack of forms that I needed to sign, and I signed them.

Now, what has happened in the marketplace much, much more than the gentleman would like to know is that when that second block of papers came back, somebody had put false information on that application because they knew this borrower was not going to qualify for the loan if they didn't fudge the borrower's income, if they didn't fudge the borrower's credit in some way. So it was not the borrower who gave the false information; it was somebody else in the chain. And that is what we have got to guard against. And that's what the basic bill is all about.

Now, we don't have any problem holding people personally accountable for the information that they knowingly provide; but if somebody just sticks some documents in front of me after I have given them the right information and they go back and change the information or put it on another form and I just happened to sign it because I presumed that the lender I am dealing with or the broker I am dealing with is honorable, I shouldn't be held accountable for that. And my second-degree amendment helps to make that clearer. And I hope by the time this bill gets passed, we can make it absolutely clear that what Mr. Hensarling is trying to accomplish and what I am trying to accomplish get taken into account.

Madam Chairman, I reserve the balance of my time.

Madam Chairman, will the gentleman yield?

I will give him the same assurance. And I said it in my statement because I just got the gentleman's amendment yesterday or the day before, and I confess that my amendment to his amendment may not accomplish everything that both of us are trying to accomplish either, which is why I said we are going to have to continue to work on this, and I am certainly willing to continue to work with him.

I understand exactly what the gentleman is trying to achieve. We share that objective. But we want to make sure that the concerns I raise don't get washed up in the ``knowingly'' term that the gentleman used.

Mr. Chairman, I claim time in opposition to the amendment.

Mr. Chairman, once again, Mr. Garrett has focused on an issue that we talked about earlier in the debate. I offered an amendment and withdrew it, and it related to this general section. Basically, what we have done is allowed the lenders to presume, if they meet certain conditions, that their loan will be considered a safe harbor loan and go into the secondary market without any complications.

In certain kinds of loans, we have made that presumption rebuttable because there is still tremendous opportunity for abuse even if they meet all of the safe harbor requirements. In other instances, we have made the presumption irrebuttable, and it was on the irrebuttable part of that that I offered the amendment and withdrew it. This is on the rebuttable part.

Now, the problem with Mr. Garrett's amendment is that if you take out this rebuttable presumption, then the presumption becomes irrebuttable for all kinds of loans, those that have risks, and those that don't have risks.

So what does that mean to the average lay person when you create a rebuttable or irrebuttable presumption? An irrebuttable presumption makes it impossible for you ever to rebut it. Because it is irrebuttable, you can't even raise it anymore. A rebuttable presumption makes it possible, even though it is presumed, that you can still go and offer evidence that what is generally a fair loan turned out to be, in your particular case, an unfair loan.

So the effect of Mr. Garrett's amendment would be to make it impossible ever for anybody to get into court and contest any of these loans. Because if you take out the rebuttable presumption, it becomes an irrebuttable presumption. We don't want that. I mean, that is where the marketplace is now. It is out of control. It has been out of control.

While we are setting up a construct to make the market better, we don't want to pass a law that then sanctions going right back to where we are now. That is how we got here in the first place, the market was out of control. And the construct that we have set up allows people to buy mortgages in the secondary market and presume that they will be okay.

But we don't want to set up a situation where it is impossible for anybody to go into the secondary market or against anybody and say under no circumstances will you be able to get liability. That is what Mr. Garrett would have you do. I think it would be very, very, very bad public policy.

With that, I encourage opposition.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield myself such time as I may consume.

I yield to the chairman.

I would just add to that, on the floor today time after time after time, I have said that the great, great, great majority of the lenders are abiding by the rules. It's not those lenders who created this crisis. It is those people who are operating outside the rules, and that is what we are trying to put a construct around that is workable to protect those who abide by the rules of the road without shielding those who will abuse the process. This amendment would allow that to happen.

Mr. Chairman, I reserve the balance of my time.

Let me thank Chairman Frank, Chairman Watt, Congresswoman Waters and all the members of the Financial Services Committee for their leadership and commitment to help Americans who are struggling. And we all know, quite frankly, many, many people are struggling to keep their homes as this mortgage crisis continues to claim victims.

This legislation adds a very important piece of what we're trying to do in terms of the protections, including limiting prepayment penalties, requiring that loans be affordable, and that refinancing provide a net benefit to borrowers. However, I have some concerns about H.R. 3915 that I hope will be addressed as it moves through the process, and I would like to just mention a few of those concerns because I think they're very important to hear. They were forwarded by ACORN, the Center for Responsible Lending, the Consumer Federation of America, Leadership Conference on Civil Rights, the NAACP, Ohio Attorney General Marc Dann, and Opportunity Finance Network. They raised concerns with regard to these issues:

One, the ability to pay. They believe the standard does not apply to all loans, it undercuts agency guidelines, and will not change the markets;

Secondly, the prohibition on steering is weak and upselling of loan rates still possible. Homeowners cannot prevent foreclosure. Some feel, and I know that this is being addressed today, that the preemption is too broad.

So, I know that, as this bill moves through the process, we will look at it. It is a starting point. I urge our colleagues to make sure that it does become stronger because this American Dream of home ownership is, quite frankly, turning to a nightmare for so many people.

I want to thank Chairman Frank for his leadership and for really trying to put together a bipartisan bill. And also, with regard to the Putnam amendment, the reporting, I think, makes sense.

November 15, 2007.

Hon. Barney Frank,

Chairman, House Financial Services Committee.

Hon. Spencer Bachus,

Ranking Member,

House Financial Services Committee.

Dear Chairman Frank and Ranking Member Bachus: We, the

undersigned organizations, write to present our views on H.R.

3915, the Mortgage Reform and Anti-Predatory Lending Act of

2007. While we greatly appreciate your efforts to reduce

predatory lending and to restore balance to the mortgage

market, we believe this bill requires improvements in the

areas described below in order for the bill to achieve its

goals.

Subprime lending has been a disaster of monumental

proportions, shattering hopes of economic progress for

millions of families and triggering a devastating chain

reaction of losses for communities and businesses. More than

two million families will likely lose their homes as a

result, and for most families--especially African-Americans

and Latinos--their home equity represents the greatest share

of their family wealth. Wall Street's demand for risky loans

with higher interest rates played a key role in encouraging

reckless lending, and brokers delivered whatever loans they

could sell.

When H.R. 3915 was introduced, we applauded many of its

strongest provisions, such as the originator duty of care and

anti-steering rules, the bans on yield spread premiums,

prepayment penalties, mandatory arbitration, and single

premium credit insurance, and the special protections for

extremely high-cost mortgages and for renters.

It is crucial to retain those strong provisions, to improve

the remedies and market incentives in the bill, and to avoid

preemption of state laws related to these issues.

Unfortunately, as the bill has passed through the legislative

process, several of the strongest provisions (such as the

duty of case and ban on yield-spread premiums) have been

weakened, the remedies have been weakened rather than

strengthened, and a preemption clause has been added that

would eliminate important state claims that help homeowners

protect the homes.

Our concerns about the bill fall into four main areas:

``Ability to Pay'' Standard Does Not Apply to All Loans,

Undercuts Agency Guidance, and Will Not Change Market: The

bill requires no ability to pay standards for approximately

90% of the current mortgage market and creates an

irrebuttable presumption that any loan below 8.25% is

affordable.

This immunity undercuts the existing joint agency guidance

that currently sets ability to pay standards for risky loans,

especially loans such as payment options ARMs, the majority

of which are ``qualified mortgages.'' Moody's estimates that

monthly payments on $220 billion of POARMs will reset--in

most cases to much higher monthly payments--between 2009 and

2011. Additionally, because there is no requirement that

secondary market purchasers conduct due diligence, we fear

that the secondary market will continue to purchase abusive

loans and choose to absorb the expense of any cures as part

of the cost of doing business.

Prohibition on Steering is Weak and Upselling of Loan Rate

Still Possible: Rather than prohibiting yield spread

premiums, as was originally intended, the bill as amended now

essentially authorizes such practices as long as there is

disclosure to the consumer. Research shows that disclosure

has virtually no effect on preventing abusive lending

practices such as steering. We also fear that incorporating

Title II into the Title I standards significantly weakens the

entire structure, and the permitted damages are insufficient

to change the market. Moreover, the damages for violation of

the steering provision are too low to change broker behavior.

Homeowners Cannot Prevent Foreclosure: As currently

drafted, homeowners have no rights against the actual holder

of the loan (in other words, against the entity that will

foreclose on them) until a foreclosure has already begun. At

that point, not only has the family been traumatized, but the

damage to the homeowner's credit is done, which will likely

prevent the use of the rescission remedy. Moreover, even in

foreclosure, it is not fully clear that homeowners will be

able to reach the holder in the vast majority of situations.

Preemption is Too Broad: Although we appreciate that there

is not preemption for the entire bill, the broad preemption

in the area of assignee liability would wipe out the many

existing state laws, such as UDAP statutes [and UCC

protections?], that provide remedies against assignees. Since

most loans are sold soon after origination, and since so many

originators and creditors are thinly capitalized (assuming

they even are still in business), many homeowners will be

left without any remedy for unaffordable loans.

Ultimately, unless legislation fundamentally changes the

incentive structure both for Wall Street and for mortgage

originators, predatory lending is likely to continue in one

form or another.

We look forward to continuing to work with the Congress as

this bill moves through the legislative process.

Sincerely,

ACORN, CDFI Coalition, Center for Responsible Lending,

Consumer Federation of America, Leadership Conference

on Civil Rights, NAACP, Ohio Attorney General Marc

Dann, Opportunity Finance Network.

Mr. Chairman, one of my concerns about this bill is the weakness, the inadequacy of the remedies available to the consumer. I have said that earlier today in the debate on this bill that I am very concerned that if industry is looking at one consumer in 50, or one in 100, or one in 200 who has actually been the victim of illegal practices, brings a claim for very modest remedies, many industries or some in industry may simply view that as a minor cost of doing business, a minor nuisance, and just keep doing what they are doing.

This amendment, while I agree it does need to be tinkered with some, would raise the stakes substantially. It does provide a more substantial penalty, $1 million plus $25,000 for each loan. That actually is not that much. Ameriquest, one of the biggest subprime lenders, paid $425 million in a settlement and just kept doing it. Just kept going. It was the cost of doing business. And their CEO is now the ambassador to one of those small, pleasant countries in Europe that big campaign contributors get appointed to be ambassadors to. It hasn't affected them in the slightest.

This amendment would call the attention of the regulatory agencies, the SEC to pay attention to the securitizers, the Goldman Sachses of the world, the big banks; Bank of America would have to answer to the OCC, their regulatory body, and on and on. Mr. Chairman, those industry groups do not want the attention of their regulator that way. They do not want to be under that kind of scrutiny; they do not want to pay those penalties. And this would substantially raise the stakes for them and encourage them to abide by the law.

Mr. Chairman, I simply want to correct something I said earlier today. Earlier today I said the Mortgage Bankers Association was opposed to this bill. That is not correct. They do not support the bill. In a letter dated today, they outlined four areas of major concern with the bill, but they did not oppose the bill. They did not support the bill, but they did not oppose it. So what I said earlier today, it was incorrect.

Mr. Chairman, I claim the time in opposition.

Mr. Chairman, title III hardly turns all subprime loans into HOEPA loans. HOEPA loans are very high-cost loans, loans with a very high interest rate. For first loans, it is 8 percent above the Treasury rate, which works out to about 13 percent. Or for subordinate loans, second or third mortgages, it is 10 percent above, which is more like a 15 percent interest rate.

In contrast, this legislation before us, the other provisions of the legislation, the other titles, treats the subprime loans as loans with an interest rate of about 8.5. So there is plenty of room between 8.5 or 13 or 15.

Mr. Chairman, it is simply not true that this legislation in North Carolina has created a problem with lending in North Carolina. We have heard it again and again in the Financial Services Committee for 4 or 5 years. We have heard repeatedly testimony by the North Carolina Commissioner of Banks, Joe Smith, who has said there is a ready availability of credit in the subprime market in North Carolina, and that it is no more expensive than it is anywhere else that he knows of.

We have heard from witnesses from industry who have said repeatedly they have been able to lend in North Carolina on the same terms and at the same rates as everywhere else, and they have been able to do so profitably.

There was a business school study at the University of North Carolina that said there has been no difference in the

availability or the cost of credit in the subprime market in North Carolina because of the protections of the North Carolina law. A Morgan Stanley survey of 280 subprime branch managers said there had been no reduction in subprime lending in North Carolina as a result of these consumer protections. And it just goes on.

In the time between 1998 before the North Carolina law was enacted and went into effect in 2003, there was a 366 percent growth in subprime lending in North Carolina. It is sort of hard to see from that that the North Carolina law killed off subprime lending.

What it did do is it protects consumers from equity stripping, from having huge chunks of their equity in their home, their life savings, taken from them at closing by outrageous up-front costs and fees, many of which were poorly disclosed.

This lowers the trigger for a HOEPA loan from 8 points at closing to 5 points at closing and closes some of the loopholes so that consumers, when they have to borrow money against their home, are not going to have their equity stripped, are not going to have their life savings, the equity in their home, taken from them.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I have the right to close, so I think I will wait until Mr. McHenry is done.

Only one of us is right.

Mr. Chairman, I reserve the balance of my time.

Parliamentary Inquiry

Mr. Chairman, the woman from Shelby would be able to borrow under this bill, it just would be a highly regulated loan, only if she is paying more than 13 percent interest or paying more than 5 percent in closing costs, which is a lot in closing costs.

Mr. McHenry really got at what is wrong with predatory lending when he said that people need to be able to refinance to pay off the loans they are in now.

That is not the kind of mortgage system we want. We don't want people refinancing to pay off the loan they are in now and pay the prepayment penalties on this loan and pay points and fees for the next loan, and then 2 years later doing it all over again. We don't want people in a cycle of borrowing and borrowing again. We want people to get into loans that they can pay off. They can pay month after month, and at some point have a ceremony, a little party, that people in another generation had of burning the mortgage because it is paid off. So for the rest of their lives, they will own their home free and clear.

Predatory lending traps people in a cycle of borrowing and borrowing again. That is something that North Carolina law successfully dealt with. If there was some slight dip in overall loans, it is because people weren't caught in a cycle of borrowing to pay off the last mortgage and then having to borrow 2 years from now to pay off the mortgage they are entering today.

It ends flipping of loans to generate fees for everybody else in the system who is getting rich off the middle class, off the middle-class homeowners. The North Carolina law is working fine for North Carolina. It will work fine for the rest of us. It has been the model for most of the States that have had their own predatory lending legislation, consumer protection legislation in the last few years. Keep title III in this bill.

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I thank Congressman Green and express gratitude to Chairman Frank, Ranking Member Bachus, Subcommittee Chair Watt and Congressman Miller for their extraordinary efforts to restore confidence in our Nation's housing markets and address the housing mortgage crisis facing our Nation, this crisis has been felt no more harshly than in the State of Ohio, one of the hardest hit States in our Union, where our foreclosure filing rates have gone up 300 percent since just last year, thousands upon thousands of Ohioans having for sale and foreclosure signs in front of their homes. In Ohio, $20 billion and growing is the gap, the financing gap.

I rise in support of the gentleman's amendment, but want to clarify that under the bill, any legal case that has been filed can proceed forward, indeed until the regulations for implementation of the bill are completed after it is signed by the President. States are not limited in their ability to prosecute in cases of fraud, collusion, misrepresentation, deception, false advertising or civil rights. Importantly, any mortgage made in the future will have to assure the borrower's ability to repay and that the borrower be yielded a net tangible benefit.

As this bill moves forward, I believe it can be perfected even more to restore confidence, discipline and provide accountability in our troubled, very troubled, housing markets, which are helping to drive our Nation into recession.

I just want to say to Chairman Frank, you are the right man in the right place at the right time. I just hope that the other body and the President of the United States follow your leadership on this really critical issue, take it not just to Ohio, but to our country.

Stockton, Detroit, Riverside-San Bernardino Post Top Metro Foreclosure

Rates in Q3

(By RealtyTrac Staff)

IRVINE, Calif.--Nov. 14, 2007--RealtyTrac'

(realtytrac.com), the leading online marketplace for

foreclosure properties, today released its Q3 2007

Metropolitan Foreclosure Market Report, which shows Stockton,

Calif., Detroit and Riverside-San Bernardino, Calif.,

documented the three highest foreclosure rates among the

nation's 100 largest metropolitan areas during the third

quarter.

RealtyTrac publishes the largest and most comprehensive

national database of foreclosure and bank-owned properties,

with over 1 million properties from nearly 2,500 counties

across the country, and is the foreclosure data provider to

MSN Real Estate, Yahoo! Real Estate and The Wall Street

Journal's Real Estate Journal.

``Although cities in just three states--California, Ohio

and Florida--accounted for more than two-thirds of the top 25

metro foreclosure rates, increasing foreclosure activity was

not limited to just a few hot spots,'' said James J.

Saccacio, chief executive officer of RealtyTrac. ``In fact,

77 out of the top 100 metro areas reported more foreclosure

filings in the third quarter than they had in the previous

quarter. Still, there continue to be pockets of the country--

most noticeably metro areas in the Carolinas, Virginia and

Texas--that have thus far dodged the foreclosure bullet.''

california, ohio, florida cities dominate top metro foreclosure rates

Stockton, Calif., documented one foreclosure filing for

every 31 households during the quarter, the highest

foreclosure rate along the nation's 100 largest metro areas.

A total of 7,116 foreclosure filings on 4,409 properties were

reported in the metro area during the quarter, up more than

30 percent from the previous quarter.

Detroit's third-quarter foreclosure rate of one foreclosure

filing for every 33 households ranked second highest among

the nation's 100 largest metro areas. A total of 25,708

foreclosure filings on 16,079 properties were reported in the

metro area during the quarter, more than twice the number of

filings in the previous quarter.

The Riverside-San Bernardino, Calif., metropolitan area in

Southern California documented the nation's third highest

metro foreclosure rate, one foreclosure filing for every 43

households. A total of 31,661 foreclosure filings 20,664

properties were reported in the metro area during the

quarter, up more than 30 percent from the previous month.

Other cities in the top 10 metro foreclosure rates: Fort

Lauderdale, Fla.; Las Vegas; Sacramento, Calif.; Cleveland;

Miami; Bakersfield, Calif.; and Oakland, Calif. California

cities accounted for seven of the top 25 metro foreclosure

rates, while Florida and Ohio each accounted for five of the

top 25 spots.

riverside-san bernardino, los angeles, detroit report most foreclosure

filings

The Riverside-San Bernardino metropolitan area reported the

most foreclosure filings during the quarter, followed by Los

Angeles, with 29,501 filings on 18,043 properties. The Los

Angeles foreclosure rate of one foreclosure filing for every

113 households ranked No. 26 among the nation's 100 largest

metro areas. Detroit reported the third highest number of

foreclosure filings during the quarter.

Atlanta's foreclosure filing total of 21,695 on 18,940

properties was the fourth highest foreclosure filing total,

and the metro area's foreclosure rate of one foreclosure

filing for every 92 households ranked No. 18 among the top

100 metro areas.

Other cities with foreclosure filing totals among the 10

highest were Phoenix, Fort Lauderdale, Fla., Cleveland,

Chicago, Miami and Sacramento, Calif.

report methodology

The RealtyTrac Metro Foreclosure Market Report provides the

total number of foreclosure filings by metropolitan area,

along with the number of households per foreclosure filing.

The household numbers are based on the U.S. Census Bureau's

2005 estimates of total housing units.

Beginning with the Midyear 2007 report, the report also

includes counts of properties with at least one foreclosure

filing reported against them. This new metric only counts a

property once, even if there were multiple foreclosure

actions filed against the property during the time period

covered by the report.