Providing for consideration of the bill (H.R. 3915) to amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to establish licensing and registration requirements for residential mortgage originators, to provide certain minimum standards for consumer mortgage loans, and for other purposes.

I am grateful to my friend the ranking member and to the chairman, and I do oppose the manager's amendment and the bill. And I don't think there is any difference of

opinion about the crisis in the mortgage markets in America today. I think the difference is on the impact that this bill will have.

The problem in mortgage markets in America today is that for years we had lenders that were giving teaser rate loans, that were taking no paperwork requirements to prove that borrowers had the ability to buy the home and pay for it. And we had lenders making 100 percent, 110 percent, 120 percent loan-to-value loans. And, obviously, that worked fine when property values were increasing. When property values declined, you have got a crisis.

In essence, what has happened is that we have had this wild galloping horse in the credit markets of mortgages that has gotten loose. Now that horse has gotten very sick. There are none of these loans being made. As a matter of fact, credible buyers with paperwork, with 20 or 30 percent equity, can't get access to mortgage loans today in many instances.

What we are doing for this sick horse is to feed it strychnine. The markets having overreacted, we as Congress are going to pile on and kill the horse with poison. And the difference we have about this bill and this manager's amendment is on the impact it will have.

Does it help poor people, middle-income people that want to get access to homeownership? No.

And I would submit for the Record an article by Star Parker, who entitles this bill, ``How to Limit Homeownership for the Poor.''

Does this bill help existing homeowners? No, because it will decrease credit availability, which means fewer people will get access to loans. There will be fewer buyers for your home. And the law of supply and demand means that all of our homes will decrease in value because there will be fewer people available to buy.

Who does this bill help? Well, this bill does help landlords. Very few people will be able to buy homes in the future. Very few people will qualify for the credit. So if you are a landlord, you should be thankful. It helps lawyers. As the Wall Street Journal said, this is the 1-800 Sue Your Banker Act. This is the lawyers and landlords relief act.

[From Scripps Howard News Service, Nov. 9, 2007]

How To Limit Home Ownership for the Poor

(By Star Parker)

The Mortgage Reform and Anti-Predatory Lending Act of 2007

has passed out of Chairman Barney Frank's House Financial

Services Committee. It's now headed to the full House for a

vote. In the name of protecting the poor from market

predators it will in actuality protect the poor from wealth.

This is yet a new chapter in the grand liberal tradition

that advances the illusion that government micromanagement of

private lives and markets will make us better off. We already

have laws against fraud and theft. But for liberals,

government isn't there to enforce the law. It's there to run

our lives.

The legislation assumes that when private individuals make

mistakes they can't figure out what they did wrong and make

adjustments and that even if they could they wouldn't.

We're going to wind up with new and onerous regulations in

the business of making loans to consumers for purchasing

homes, and as a result, fewer loans will be made and we'll

all be worse off. Those who will be penalized the most will

be the low-income families who the new regulations will

supposedly protect.

Should fraud be permitted in our society? No. Should

government interfere with private individuals' latitude to

determine on their own what risks they wish to take and the

willingness of others to finance those risks? Absolutely not.

Frank's bill crosses far over the line into regulating

private lives and behavior where he and government have no

business.

Why will this hurt the very low-income families it purports

to protect?

We already have plenty of experience with the costs of so-

called consumer protection laws in general and those designed

to regulate mortgage lending in particular.

In a recently published article in the Cato Supreme Court

Review, Professor Marcus Cole of the Stanford University Law

School discusses the fallout of lending laws in Illinois.

The Illinois Fairness in Lending Act passed in 2005 gives

the state oversight authority on loans made in nine

designated zip codes in the state. These zip codes are, of

course, areas in which residents are mostly lower-income

households.

The law places authority in a state bureaucracy to review

all applications for mortgages in these designated zip codes.

The bureaucrats who review these applications determine if

the borrower needs credit counseling and requires the lender

to pay for it if required.

The costs of the counseling are estimated to be as high as

$700 and can delay the processing of the loan up to a month.

The borrower has no option to forego this counseling, whose

objective is ``to protect homebuyers from predatory lending

in Cook County's at-risk communities and reduce the incidence

of foreclosures.''

What's the result?

Cole reports the following: ``Instead of protecting

hardworking would-be homeowners from predatory lending, the

new law protected them from credit. Within just a few months

more than 30 mortgage lenders refused to lend on homes

purchased in the targeted zip codes. Those lenders determined

to service these communities saw a rise in their costs, which

translated into higher interest rates on their loans.''

The purported cure was worse than the disease. Cole goes on

to note that, ``home sales in the designated zip codes

dropped an average of 45 percent in just one month after the

bill took effect. Home prices plummeted, draining relatively

poor but hardworking people of what little equity they had in

their homes.''

The experience is similar in other states where governments

have authorized bureaucrats to insert themselves between

lenders and borrowers. Yes, the number of defaults have

declined. They have declined because the number of loans have

declined.

The Wall Street Journal reports that currently ``80 percent

of subprime loans are being repaid on time and another 10

percent are only 30 days behind.''

These are overwhelmingly loans to low-income families.

Probably, under Barney Frank's new regulatory regime, many of

these loans would not have been made and the families in

these homes would be renting and considerably less wealthy

than they are today.

To quote former Texas Rep. Dick Armey, ``freedom works.''

But it can only work if we let it.

Many have paid and are paying a great price for the errors

and excesses of recent years. We now should allow private

individuals and private markets the opportunity to self

correct, which is what will happen.

If government steps in to pre-empt the market and Barney

Frank is the one to decide who gets loans, the rich will stay

rich, the poor will stay poor, and we'll have one more reason

for already skeptical Americans to question the American

dream.

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

Mr. Chairman, I rise in support of this legislation. I believe that it does, in fact, address abusive practices which, unfortunately, are in our mortgage lending market today. I believe it brings some needed oversight to the mortgage industry.

The legislation that we are considering today is the product, and everyone acknowledges this, industry acknowledges it, consumer groups, Members on both sides, the membership has engaged for over 2 years in an attempt to come together to span political differences, philosophical differences, and to address the very serious problem in the housing finance market.

I want to commend the gentleman from Massachusetts. He has allowed us to fully express our opinions. I believe that this long dialogue which we have had has resulted in consensus legislation which, though not perfect, I believe will achieve two very important, very necessary goals. One is to implement reforms that will offer consumers needed protection against predatory lending practices; and two, I believe, and I sincerely believe, that this legislation will preserve working Americans' access to consumer credit.

I believe that the Members most closely involved in the negotiations which led to the manager's amendment sincerely believe we have achieved these goals. We need not let the perfect be an enemy to the good. Members from both sides will address provisions of this bill which they believe do not satisfy the goal I have described above.

I believe the fact that this legislation fully satisfies neither side is an indication that we are in about the right place in achieving a nonpolitical, legislative remedy to address this issue of such great impact to our economy and our families, both now and moving forward.

In closing, let me say it has always been my view that when faced with serious issues like this one impacting millions of families across America, that Congress has both the privilege and the responsibility of rising above partisanship and acting in the public's interest. With this legislation today, I believe we have done just that.

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

Mr. Chairman, I recognize the gentleman from California (Mr. Royce) for 3 minutes to speak in opposition to the bill.

Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Hensarling), who rises in opposition to the bill.

Mr. Chairman, at this time I yield 2 minutes to the gentleman from South Carolina (Mr. Barrett).

Mr. Chairman, I yield 3 minutes to the gentlewoman from Illinois (Mrs. Biggert).

Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Neugebauer) to speak in opposition to the bill.

Mr. Chairman, I yield 2 minutes to the gentlewoman from Ohio (Ms. Pryce).

Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Price) who speaks in opposition to the bill.

Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Miller) to speak in support of the bill.

Mr. Chairman, may I inquire as to the remaining time.

Mr. Chairman, I yield 2 minutes to the gentleman from Illinois (Mr. Roskam) to speak in opposition to the bill.

Mr. Chairman, I yield 3 minutes to the gentleman from North Carolina (Mr. McHenry) to speak in opposition to the bill.

Mr. Chairman, at this time I recognize the gentlewoman from West Virginia (Mrs. Capito) for 3 minutes.

The chairman is correct. Section 107 was designed and implemented to give the Federal bank regulators flexibility in implementing the national registry. And it is the intention of the committee, of the entire committee, that, as they do this implementation, that they give proper consideration to its impact on small financial institutions, smaller impact, and that they try to minimize that impact.

Mr. Chairman, I claim time in opposition, although I am not opposed to the bill.

I yield 15 seconds to the chairman of the committee.

Mr. Chairman, I yield 2 minutes to the gentleman from Florida (Mr. Feeney).

Mr. Chairman, I rise in support of the bipartisan manager's amendment. It makes both technical and substantive changes in the legislation, and I think significant contributions. For example, the amendment incorporates language authored by the gentleman from California (Mr. Gary G. Miller). His amendment clarifies the bill's anti-steering provisions to ensure that consumers retain the ability to finance points and fees in connection with a mortgage transaction. It also corrects certain problems in the provisions dealing with renters and foreclosed properties that Mr. Marchant from Texas raised during the markup. And it addresses some of those problems.

The amendment also includes provisions drafted by the gentlelady from Ohio (Ms. Pryce) that will give consumers regular updates on the term of their mortgages and advance notice of any impending interest rate adjustments. Now, these are important improvements in the bill. And I again thank Chairman Frank and the other members who contributed to the manager's amendment, and urge support for the manager's amendment.

I would yield the remaining time that I have to the gentleman from California (Mr. Campbell).

Mr. Chairman, I rise in strong support of this bipartisan amendment offered by the gentleman from Pennsylvania (Mr. Kanjorski). The amendment, among other things, enhances the integrity of the appraisal process, and requires the taxes and insurance on subprime mortgages be escrowed. These are two glaring problems in today's subprime market, and I think both these requirements will go a long way towards making these loans sounder and reducing the number of foreclosures and delinquencies.

These issues are ones that the gentleman from Pennsylvania has worked on for many years. He deserves credit for an amendment that will improve many key aspects of the mortgage origination, servicing, and appraisal process; and I compliment him.

Chairman Kanjorski worked closely with my colleagues, Ranking Members Judy Biggert and Shelley Moore Capito, in crafting the amendment. And the three of them actually offered the amendment that addresses legitimate administrative and operational concerns that have been raised, not only by consumer groups, but by the industry itself. And the mortgage appraisers, or the Appraisers Institute, actually endorsed this measure. And it maintains the underlying bill's strong consumer protection.

And this amendment offers additional strong protections.

I commend all three of our colleagues for their efforts and urge support for the amendment.

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

I dearly wish that this bill was the one being described by so many people on the other side of the aisle. That sounds like a really tough bill. And this bill, I hope, will become tougher as we go along.

I agree with many over there who said that they support the idea of homeownership and want to make sure that there is a mortgage market that lets people buy homes.

Mr. Chairman, the mortgages we are talking about have nothing to do with homeownership. According to the mortgage bankers themselves, who oppose this bill, 72 percent of subprime loans are refinances, not purchase money mortgages. And only about one in 10 subprime loans is to buy a first home. Lehman Brothers says that 30 percent of the subprime loans entered last year will result in final foreclosure, a family being turned out on the streets by a sheriff because their home was sold at a foreclosure auction at the steps of the courthouse.

Do the math. One subprime loan in 10 helps people buy a home, a first home, get into homeownership. Thirty percent will result in foreclosure. The loans that we need to get at, we need to prohibit, are costing Americans homeownership, not helping with homeownership.

Now, several speakers have said that they think the consumers should make choices, there should be a variety of choices available to consumers. Sometimes they say this bill will shut down market innovation. Well, Americans are for innovation, Mr. Chairman, just as they are for reform. Americans are fundamentally reformers so politicians have figured out to call everything they do a ``reform,'' however obviously contrary to the public interest it is. And now American business has learned to call everything they do an ``innovation,'' regardless of how bad it hurts consumers.

I can think of many wonderful innovations. When we think of an innovation, we think of a scientist in a lab coat coming up with new products.

Mr. Chairman, I am now the age my father was when he died of a heart attack in 1965. There wasn't a thing we could do to help people with heart disease in 1965. But I am on a cholesterol medicine because I inherited from my father high cholesterol that I hope will allow me to outlive my father. I think that drug is an important innovation, and I am glad we made that innovation.

Mr. Chairman, this necktie is an innovation. Ten years ago, you could not buy a silk necktie that was stain resistant. And for those folks like me who tend to miss their mouth from time to time, the cost in new neckties in any given year was hundreds of dollars. But this tie has a nanotechnology process that causes liquids to bead up and roll off rather than soak in and stain. This necktie is an important innovation to me.

But what on Earth do we mean when we say that a mortgage is innovative? It means simply that there is no end to the variety of terms, there is a proliferation of indecipherable terms that are not designed to help consumers.

Alan Greenspan called them ``exotic loans.'' Others have called them ``toxic loans.'' The innovation is not really about allowing consumers to tailor narrowly the loan they get to their specific circumstances. The late Ned Gramlich, a well-regarded former Federal Reserve Board governor, asked why was it that the riskiest loans were being sold to the least sophisticated consumers. It was a rhetorical question. He knew the answer. He knew those loans were being sold to people to take advantage of them, to separate from middle-class homeowners more and more of the equity in their home, to trap them in a cycle of having to borrow and borrow again, and every time they borrowed, losing more of the equity in their homes.

Some of the other speakers have talked about the importance of refinancing out. Mr. Chairman, a mortgage system where people have to borrow money to pay off the mortgage they are in now is not a mortgage system that works.

I thank the gentleman.

I would now like to engage in a colloquy with Mr. Frank concerning this. And, Mr. Chairman, both Mr. Frank and I would deeply appreciate a slow gavel on this particular point.

Mr. Frank, please direct your attention to the language at the bottom of page 5 of the manager's amendment, clarifying the prohibition against payments to loan originators that vary with the terms of the subprime mortgage, which, as Mr. Murphy of Connecticut has already pointed out, is an important antisteering provision. The abuse that the prohibition addresses is the payment by lenders to originators, most often brokers, known as a yield spread premium.

Under widespread practice now, lenders pay brokers an additional percentage point in a yield spread premium for every additional half point in interest on the mortgage above the rate that the borrower qualified for. Although borrowers sign a piece of paper agreeing to the payment by the lender, the broker hands the borrower the paper and tells the borrower what the borrower is signing, and most borrowers never realize that the broker makes more money the more that the borrower pays for the mortgage.

I agree with Mr. Murphy of Connecticut, that is a kickback. It is not a legitimate business practice. It needs to change.

Mr. Frank, as I understand it, the clarifying language in the new subparagraph does not simply permit what the previous subparagraph forbids, but it is directed to limited circumstances and does not allow any additional total compensation for an originator. Just as a buyer may pay discount points at closing to buy down the interest rate over the life of the loan, subparagraph (B) allows a consumer to pay more in interest over the life of the loan in return for lower costs and fees at closing.

Is that correct?

And is it also correct that any payment by the lender to the broker, or to use the language of the bill, any incentive compensation paid by any person to any originator, based on a higher interest rate, is still forbidden?

I am glad that Mr. Frank earlier embraced redundancy as a virtue, but I want to continue even though it may be redundant.

So a mortgage originator under this subparagraph, the one we were speaking of a moment ago, will get paid exactly the same in total compensation, including both the compensation paid by the borrower and the compensation paid by the lender, whether the interest rate is 6 or 8 or 10. Is that right?

And so any compensation paid by the lender will be backed out dollar for dollar from what the borrower had agreed to pay; is that correct?

Mr. Speaker, I want to thank the gentleman from New York (Mr. Arcuri) for yielding me the customary 30 minutes, and I yield myself such time as I may consume.

(Mr. HASTINGS of Washington asked and was given permission to revise and extend his remarks.)

Mr. Speaker, this rule allows for the consideration of the Mortgage Reform and Anti-Predatory Lending Act, aimed at reforming mortgage lending practices in order to prevent subprime mortgage problems in the future.

I support efforts to better protect homeowners through simplified borrower disclosure, greater focus on deceptive practices, and enhanced education, training and oversight of lenders.

While I recognize that several significant changes were made to address some of the most concerning parts of this legislation during the committee markup, additional improvements and clarification are still needed. Consumers must have protections without unduly restricting credit opportunities or creating enormous liability for the mortgage lending industry.

We must improve the mortgage process to empower consumers to make good choices among competitors, not limit options for them. Also, we must ensure that this bill does not hurt the consumers that it is intended to help, especially those consumers with less than perfect credit histories that hope to achieve the American Dream of homeownership.

The current climate of rising defaults and foreclosures, especially in the subprime market, has shown us that poor lending decisions and abusive lending practices must be addressed.

And while we must deal with the bad actors in the lending industry, let's not forget about the good lenders and investors that have helped thousands of families successfully purchase their homes.

This bill is a step in the right direction, but improvements should be made as this legislation moves forward. I was hoping that the Democratic-controlled Rules Committee would see fit to provide an open rule for consideration of this bill. Under an open rule, Members could come to the floor and offer amendments in their effort to perfect this bill. While this rule allows several amendments to be offered, it is unfortunate that this restrictive rule also prevents Members of Congress from offering amendments on the floor during debate of the bill.

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

Mr. Speaker, I reserve my time.

Mr. Speaker, I am pleased to yield 4 minutes to the gentleman from Texas, a member of the Financial Services Committee (Mr. Hensarling).

I yield myself 2 minutes, Mr. Speaker.

Mr. Speaker, I just want to respond to my friend from Massachusetts when he outlined the amendments that were made in order and the substance of some of those amendments to be debated and also suggesting that he would oppose some and accept others. I have always admired that in him when he comes up to the Rules Committee and feels that that's part of the legislative process.

The point that the gentleman from Texas was making, apparently he had two amendments, and one of them the gentleman from Massachusetts is going to work with him on; so that one will be resolved. But the gentleman from Texas felt very strongly that the amendment that was not made in order, really the only amendment that had any substance was not made in order, was his amendment, and we don't get a chance to debate it. I think that's a valid argument from his perspective. And I know the gentleman from Massachusetts had nothing to say obviously about that.

So I just wanted to make that point, that, yes, there are a lot of amendments that were made in order. Some of the amendments that were made in order will be addressed later on. But I wanted to make the point of what the gentleman from Texas had made that his amendment was not made in order.

I yield to the gentleman from Massachusetts.

The gentleman has always been open to debate. I am glad he has given us advice on maybe what we want to put in the motion to recommit. One of the easiest ways to do that obviously would be to have made that amendment in order. He had nothing to do with that decision. That was a decision of the Rules Committee. I wish it had been made in order. An amendment was offered to make that in order and was defeated on a party-line vote.

I always appreciate the gentleman offering his advice.

I reserve my time.

Mr. Speaker, could I inquire of my friend from New York if he has any more speakers.

So if the gentleman is prepared to close, I will close on my side.

Mr. Speaker, I yield myself the balance of the time.

Mr. Speaker, it really is time for Congress to act and pass a stand- alone veterans funding bill. For the last several weeks, I have encouraged my colleagues to vote ``no'' on the previous question so that we can amend the rule to allow the House to immediately act to go to conference with the Senate on H.R. 2642, the Military Construction and Veterans Affairs funding bill and appoint conferees.

We have heard comments from Democrats that when Republicans were in charge that we did not get our work on the veterans funding bill completed on time. So I would ask my Democrat colleagues, if you don't like the way things were run then, then why are you exactly on the same path? Mr. Speaker, a final veterans funding bill is sitting waiting to be acted on. The Democrat leaders have bent over backwards to prevent Congress from passing the final bill. The stalling is costing our American veterans $18.5 million a day. Since the fiscal year began 46 days ago, our Nations's veterans are out $851 million. The veterans funding bill passed the House this summer with over 400 votes and passed the Senate with over 90 votes, and the President will sign the bill. So let's stop delaying, and let's defeat the previous question so that we cannot just say that we are committed to providing for veterans the funding increase that they need, but we actually get this increase to them.

Mr. Speaker, I ask unanimous consent to have the text of the amendment and extraneous material inserted in the Record prior to the vote on the previous question.

Mr. Speaker, I urge my colleagues to oppose the previous question, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Chairman, I rise today in strong support of H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, introduced by my distinguished colleague from North Carolina, Representative Brad Miller. This important legislation will address and reform the mortgage lending processes ``to avert a recurrence of the current situation with rising defaults and foreclosures, especially in the sub-prime market.''

Mr. Chairman, it is essential that this Congress protects the needs of American families and nothing is more imperative than ensuring that all people have a home. Recent studies have reported that 92 percent of the American population has at some point feared being homeless and this legislation is an important step in alleviating those fears. The current lending crisis must be addressed.

The Federal Government must play an important role in revitalizing and restoring opportunities for Americans to reach the American dream of owning a home. One of the major contributors of the affordable housing shortage is the sub-prime lending crisis that has caused serious negative economic and social consequences that resulted from too little regulation. Because of the lack of regulation by the Federal Government, many loans were accompanied by fraud, inadequate information and other failures of responsible marketing. Foreclosure rates are at 14 percent and are rising at an alarming rate and homeowners across America are losing their homes. Throughout the country, homeowners are surprised to find out that their monthly payments are spiking and they are struggling to make these increasingly high payments.

The sub-prime mortgage crisis has impacted families and communities across the country. Home foreclosure filings rose to 1.2 million in 2006--a 42 percent jump--due to rising mortgage bills and a slowing housing market. In Iowa, 3,445 families experienced foreclosure last year, up 64 percent from 2005.

Nationally, as many as 2.4 million sub-prime borrowers have either lost their homes or could lose them in the next few years.

The Democratic-led House Financial Services Committee has been intently focused on this and other issues and is working toward a balanced solution that helps stabilize the mortgage market, stops abuses, preserves access to credit, and aids stable homeownership.

Creating more affordable housing opportunities will increase more job opportunities for the people of Houston and Harris County. We hope that an increase in affordable housing and job opportunities will also reduce the high rates of homelessness among Houston residents. As you may know:

Houston's homeless population increased to approximately 14,000 in 2005 before Hurricanes Katrina and Rita.

Hurricane evacuees remaining in the Houston area could result in the homeless population increasing by some 23,000 to 30,000.

Houston's homeless population includes an estimated 28 percent of American Veterans.

Some 59 percent became homeless because of job loss.

A full 10 percent of the city's homeless are believed to be able to return to self-sufficiency with 12-18 months of assistance and affordable housing.

Shelter and housing for Houston's homeless currently is reported at around 4,235 beds and or units, leaving 10,000 on the streets.

I have cosponsored a number of bills to address the housing crisis in this country. In the 109th Congress I cosponsored H.R. 1182, the Prohibit Predatory Lending Act, and H.R. 1994, the Predatory Mortgage Lending Reduction Act. I will continue to support legislation to address the housing crisis facing the people of this country.

This important piece of legislation will ``create a licensing system for residential mortgage loan originators, establish a minimum standard requiring that borrowers have a reasonable ability to repay a loan, and will attach a limited liability to secondary market securitizers.'' This is extremely significant in the sense that it will ensure that Americans who dream of home ownership will not engage in loans that they will be unable to repay. It will enhance and expand consumer protections against ``high-cost loans.'' It will protect renters of foreclosed homes and establish through the Department of Housing and Urban Development an Office of Housing Counseling that will ensure that consumers will be fully aware of all possible avenues.

While this legislation is a step in the right direction, we must ensure that this legislation does not hurt those who it is intended to protect. We must ensure that families with a less-than-perfect credit history are not denied outright their dream of home-ownership and that lenders do not abuse their discretionary powers. This legislation creates a standard licensing system for residential mortgage loan originators that will ensure a consistent rubric for loans and protect American families from would-be predatory lenders. It further expands consumer protections from high-cost loans by: prohibiting the financing of points and fees; prohibiting excessive fees for payoff information, modifications, or late payments; prohibiting practices that increase the risk of foreclosure, such as balloon payments, encouraging a borrower to default, and call provisions, and requiring pre-loan counseling. This is an unprecedented step forward for hard working Americans with the dream of home-ownership and I applaud this legislation for this significant first step towards helping Americans realize their dreams.

Finally, let me acknowledge the concerns of strong advacates for the housing needs of the vulnerable--ACORN and the NAACP, among others, and I look to working on changes in this legislation as the bill moves to address their concerns.

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.

Mr. Speaker, I will address much of the substance of the bill in the general debate. I do want to say we are here dealing with an issue, subprime mortgages, that is the single biggest contributor to the greatest financial crisis the world has seen since the Asian crisis of the late nineties.

We are in a very difficult situation now in the financial markets; and wholly unregulated subprime mortgages, unregulated by the originator and then unregulated in the secondary market, has given rise to this.

The previous speaker talked about the danger we could do with our liability for the securitizers. I would note that one of those who volunteered to our committee that we should do something, he wasn't specific about what, but something to put some liability there was the Chairman of the Federal Reserve, Mr. Bernanke, who has talked about what he called the originate-to-distribute model, i.e., people who give mortgages who are not themselves subject to regulation who then in turn sell into a secondary market, and what has been lost in that is the responsibility to worry about repayment. Now, we will talk more about this.

There is a delicate balance here. I am not in favor and this bill does not in general preempt the rights of States to do what they think is necessary in the consumer protection area. But in the matter I just talked about, when we are talking about a national secondary market, we did believe some preemption is necessary. We have tried to define it precisely and hold it to a minimum necessary to have a functioning market. As I said, I will address some of those more.

The bill, I believe, does strike a balance that can be a difficult one to achieve, particularly in that area of some preemption so that you have a functioning secondary market, but not to the point where you intrude on the rights of States to make these decisions.

I do want to address the rule. At my request this rule does make in order a number of amendments from both parties. Several of the amendments offered by Republicans will be, I hope, accepted. The manager's amendment itself is a genuinely bipartisan amendment. Much of the manager's amendment, in fact, came from the minority; and, indeed, in our committee the ranking member had a major input into this. This bill did pass committee by a vote of 45-19, which was the Democrats and, not a majority, but a significant number of Republicans.

We have, I believe, a rule that allows most of the issues that are at stake to be voted on. There are amendments that would strike major parts of the bill. The gentleman from North Carolina has one. The gentleman from Georgia has one. There is a third, the gentleman from New Jersey. Three amendments that would strike very much at the heart of the bill. I believe they should be debated and I would hope defeated, but they are made in order.

I did consult very much with the ranking member, and I believe we have a procedure today that doesn't cover everything, but will have the major issues before us.

At the end of today, I hope we will have passed a bill and it will be a bill which I must say will probably leave all parties at interest a little bit unhappy. I'm not pleased with that, but I think given the competing interests here, that is the best we can do, particularly on this issue of whether or not we preempt.

I would note that while some of the groups that I work with in the consumer area are disappointed because they wanted no preemption at all, passage of this bill is supported by the Conference of State Bank Supervisors. They think there are some things they would like to see changed further on. It's supported by the NAACP and La Raza. And it has, we believe, the essential elements.

The core is this: loans made by banks as originators subject to bank regulation have not been the problem. The problem has come when loans were originated by unregulated people, not that they were morally deficient, but there was no regulation. Here is the core of this bill: we have tried talking to the bank regulators and others to take the principles that the bank regulators have applied to loans originated by regulated depository institutions and apply them to the unregulated originators, the brokers. And it is not the case that the brokers were morally deficient. In all of these professions, we have an overwhelming majority of honest people. But the problem is, in the absence of any regulation and the availability of a secondary market with no rules, that minority that was not scrupulous caused us problems. This bill fixes that.

Mr. Speaker, will the gentleman yield?

I thank the gentleman. I appreciate his comments, and I think he's right.

The gentleman from Texas' amendment not made in order was a substantive amendment. I do believe, as I looked at the amendments, every other amendment from either side that presented a substantive issue was made in order, and, frankly, I assumed that this could be the recommit, if the minority cared about it.

We did in the rule, as we should have, provide for every substantive issue to be debated, except that one. There is the motion to recommit, and that would be available for the motion to recommit.

I appreciate it. I don't contest anything he said. But I would say it did seem to me, as I looked at it in a neutral way, that the minority did need some help on dealing with recommits.

I thank Chairman Frank and my colleagues, Congressmen Watt and Miller, from the great State of North Carolina, who passed legislation in the

State legislature first and helped build a strong bipartisan bill in our committee that passed with a strong vote of 45-19. The economic crisis we are facing is no longer just a subprime crisis, but a credit crisis. Subprime losses are mounting and the economic pain is being felt in communities across this country, as the ripple of foreclosures spreads to neighborhoods and local economies. Economists estimate that between 2 million and 5 million families could lose their homes by the end of 2008, more than the number of families that lost their homes during the Great Depression.

Democrats are working hard to help families stay in their homes and prevent another crisis like this from happening in the future. I submit for the Record a list of legislative actions and other actions that Democrats in Congress have passed to help families stay in their homes. With this bill, we take the first step towards reforms for the future. The bill would bring mortgage brokers who are currently regulated on a state-by-state basis under a nationwide licensing registry, establish minimum standards for home loans, and expand certain limits on high- cost mortgages.

It also would prohibit brokers from steering consumers to mortgages they are unlikely to be able to repay. It changes the incentives for all market participants.

The bill would also establish some legal liability for securitizers, but it also provides some liability protection to those companies if they meet certain due diligence requirements in reviewing the loans they are packaging. Any legislation on this issue must strike a very delicate balance that provides consumer protections without unnecessarily limiting the availability of loans to creditworthy borrowers.

I congratulate the chairman for coming forward with a well-balanced bill on a very difficult subject that is incredibly important. I urge my colleagues, we must pass this bill.

Tackling the problem of subprime mortgage reform is like slaying the many-headed Hydra of Greek mythology--unless you go about it the right way, for each head you chop off, two more vicious ones will grow in its place.

I congratulate Chairman Frank for producing an ambitious and comprehensive bill that deals with many key aspects of this difficult issue.

It is a comprehensive and sweeping reform of the mortgage industry that would require all actors in the mortgage market to operate with the kind of accountability and regard for the consumer's best interest that the best mortgage lenders have always observed.

In this respect, the bill tracks the comments of Federal Reserve Chairman Ben Bernanke, who said in testimony before the JEC that limited and clearly defined assignee liability could prove beneficial.

To do this, the bill preempts State laws in the section dealing with securitizers, reflecting the concern that differing State laws would interfere with oversight of a national market. But it leaves States free to regulate in other areas where States have traditionally led the way in consumer protection for their citizens.

This is a well-balanced bill and I urge my colleagues to support it.

Democrats in Congress Are Working to Help Families Stay in Their Homes

We need to act quickly to stem the tide of foreclosures

that could ruin families, communities, and the economy.

The House has passed legislation to enable the FHA to serve

more subprime borrowers at affordable rates and terms,

attract borrowers who have turned to predatory loans in

recent years, and offer refinancing to homeowners struggling

to meet their mortgage payments.

Fannie Mae and Freddie Mac are providing much needed

liquidity in the prime market right now. We passed a GSE

reform bill in the House, but we should also raise the cap on

these entities portfolio limits, at least temporarily, and

direct all of those funds to help borrowers who are stuck in

risky adjustable rate mortgages refinance to safer mortgages.

To make servicers more able to engage in workouts with

strapped borrowers, we pushed FASB to clarify what its

Standard 140 allows for modification of a loan when default

is reasonably foreseeable, not just after default.

Congress should eliminate the cruel anomaly under Chapter

13 of the Bankruptcy Code which allows judges to modify

mortgages on a borrower's vacation home or investment

property, but not the home they actually live in. This allows

families to stay in their home while new loan terms are

worked out.

I think we should also eliminate the tax on debt

forgiveness, sparing families the double-whammy of paying

taxes on the lost value of their homes.

Democrats in Congress Are Working to Prevent Another Crisis

Our regulatory system is in serious need of renovation to

catch up to the financial innovation that has surpassed our

ability to protect consumers and hold institutions

accountable.