Case Management Services Improvement Act of 2007

Mr. President, today I introduce the Real Estate Transparency Act of 2007. This bill would amend the

Real Estate Settlement Practices Act of 1974 to improve the early loan disclosures given to those applying for a mortgage, ensure binding and transparent payment agreements between mortgage originators and borrowers, and require that a borrower be given a copy of their final settlement statement at least one business day before settlement so that it can be thoroughly examined before closing.

As we are all too aware, current Good Faith Estimates do not provide enough useful information to help borrowers truly make informed lending decisions. We have heard too many stories of borrowers not understanding the terms of their loan or not being told about unexpectedly high settlement fees until they are at the closing table. This lack of early and appropriate disclosures regarding the terms of a mortgage loan and the costs of closing on that loan hinders a family's ability to shop for the best loan product for the purchase of a home, and also has allowed families to be taken advantage of by unscrupulous brokers and lenders.

First and foremost, the Real Estate Transparency Act would replace the current Good Faith Estimate with an early written settlement statement of all of the costs to be charged to that person at or before settlement of the loan. It would require that this early settlement statement be in the same form as the final settlement statement, currently known as the HUD 1. The borrower would not be liable for any fees which are not disclosed on this early settlement statement, except for third party fees within 10 percent of the cost listed on the early settlement statement, or fees for bona fide and reasonable expenses not anticipated by the mortgage originator for an inspection, appraisal, survey, or flood certification. This early written settlement statement should allow consumers to compare the costs associated with different loan products from different mortgage originators and shop around for the best product for them early in the process.

Second, this legislation would require for the first time that the HUD 1 or final settlement statement be provided to the borrower at least one business day before settlement. If this final settlement statement is not provided to the borrower, then lenders will be subject to statutory damages.

Third, this bill would require mortgage originators to provide borrowers with a written agreement itemizing all of the fees they may charge the borrower, including any origination fees, underwriting fees, broker fees, or other fees to be charged at or before settlement of such loan to be paid to the lender, the broker, or affiliates of the lender or broker. In addition, this written agreement would have to set out and explain three possible methods of payment for such fees: payment in cash before or at settlement; adding such fees into the loan amount to be borrowed; and increasing the interest rate of the loan. The borrower also could choose to both pay in cash and incorporate some of the fees into the loan amount. This written agreement regarding mortgage origination fees would have to be provided to the borrower within three days of application and be signed before the borrower is obligated to pay any of these fees. Not only should this provide greater transparency regarding what fees are going to be charged by the mortgage originator, consumers also can decide not to sign on the dotted line if they do not like the costs associated with the loan.

Finally, the bill subjects mortgage originators to statutory damages for violations of these disclosure provisions equal to the sum of the borrower's actual damages plus $5,000 for each instance such instance of noncompliance.

Congress needs to take many steps to address the subprime mortgage crisis and to reinstate confidence among our nation's homeowners and those we hope will become homeowners. I believe that giving consumers the information they need regarding their loan costs is a vital part of improving this complicated and often overwhelming process. Borrowers need to better understand the financial ramifications of choosing a certain loan product from a certain mortgage originator early in this process, and before they actually consummate the loan. I hope my colleagues will join with me in supporting this legislation that I believe will greatly improve mortgage loan disclosures.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I would like to take a few minutes today to discuss the issue of giving legal government documents to people who are in the United States illegally.

There is no question our immigration process is broken. People who attempt to enter the United States legally--to work, to join their families--well, they often face bureaucratic redtape and incredible delays. Legal entry into the United States has become more difficult as a result of the events of September 11, 2001. There is no question that should be the case.

Unfortunately, illegal entry remains a significant problem. It is estimated that between 13 million and 20 million people are illegally in the United States. The fact that the estimates are so far apart should in and of itself give us all cause for concern.

What should also give us concern is that there are efforts in the United States today to provide driver's licenses to those in this country illegally. I believe such efforts are inappropriate and are a serious threat to our national security.

There is no question that legally issuing driver's licenses or other government documents to people who are here illegally puts our entire Nation at risk. I am troubled by those who argue that we will be safer if we provide official government papers to those who have come to our country illegally. I believe this is the wrong path. It is the wrong path for us to take, and it is contrary to the lessons we should have learned from the events of September 11.

To receive a driver's license, any State used to require proof that someone could drive and proof of identity through a legally issued government document. This was often done through a notarized birth certificate or a passport. Over time, criminals have found ways to forge these documents, and they made it easier for individuals to illegally acquire identification, such as a driver's license.

Some of the 9/11 hijackers had acquired identification documents through forged papers. It should be a wake-up call to all of us. More must be done to prevent this from happening in the future.

This past year, in the Wyoming State Senate, I worked with Representative Pete Illoway to pass legislation making it a crime to use false documents to conceal a person's identity, to conceal a person's citizenship, or to conceal their resident alien status in order to obtain public resources or public services. We specifically identified driver's licenses in the law in Wyoming because of the significance that document plays in allowing individuals to freely move about the country. The bill was passed by the legislature and was signed into law. The value of legally issued driver's licenses cannot be underestimated in

maintaining our national security. In Wyoming, we get it.

I, along with many people in America, cannot understand the arguments supporting the issuance of driver's licenses to illegal immigrants. To me, giving driver's licenses to illegal immigrants will compromise our national security.

We have an immediate situation before us where illegal immigrants in certain parts of the country will be provided government documents that will allow them to freely travel all across our great Nation. It is inconceivable to me that this will make our Nation safer.

The Federal Government has a responsibility to secure our borders and to secure the interior of the United States. Though that effort has come up short over the years, it does not mean we should throw up our hands and do nothing. I believe we must take action--aggressive action--to address this issue.

Today, I am introducing a straightforward legislative proposal. It is S. 2334. It is a straightforward legislative proposal to deal with States that provide driver's licenses to those who are in our Nation illegally. Simply stated, my legislation would require States to verify lawful presence in the United States before granting a driver's license. States that refuse would lose a part of their Federal transportation funds, and those Federal transportation funds would then be redistributed to the States that do follow the law.

I do not know if this is a perfect solution. I do know that issuing driver's licenses to illegal immigrants is wrong. Rewarding illegal immigrants--people who have broken into our country--with a driver's license is a flawed idea. It is an idea that deserves Congress's immediate attention. We cannot allow our country to go down this path. The time for action is today.

Mr. President, almost a year ago, we passed a Homeland Security Appropriations bill. Included in that very large piece of legislation was a small provision that probably went beneath most people's notice.

Section 426 of that bill allows Federal funding to provide case management services after a disaster. That has been a tragically absent component to our circumstances in Louisiana. Educated people struggle to find their way through the Byzantine morass that is FEMA individual assistance program, the Small Business Administration's loan program, the Road Home program and their own insurance company's requirements. Think of how all of this seems to working people who are encountering Federal bureaucracy for the first time.

So, we need case management badly. Unfortunately, Section 426 fails the people of my State in two important ways. First, and this predates the change in Congressional leadership, it allows for case management services--but only for future disasters. The legislation that I am introducing today makes Section 426 retroactive to 2005 and will now cover Hurricanes Rita and Katrina, as well as succeeding disasters.

Two years after the disaster, we only distributed half of the Road Home grants. It is obvious that we will need case management services for years to come in Louisiana. It is only common sense to direct these resources to the Gulf Coast today, where they are direly needed.

However, an equally important failing of Section 426 comes from its implementation. In New Orleans and throughout the Gulf Coast, the energy for the recovery effort has truly come from America's faith community. You can see their good work in neighborhoods that are returning in my hometown. You can see them with hammers and nails in the Gulf Coast towns of Mississippi, and you can find them helping thousands of victims of Katrina and Rita to navigate the bureaucratic hurdles between them, and rebuilding their lives.

As we have not had the benefit of Government supported case management, nonprofits and the faith-based community have stepped in to fill the obvious void. Unfortunately, the same community that has been such a lifeline to the people of the Gulf Coast has been barred from competing for Federal funding under Section 426.

This is a shocking turnaround for an administration that has put so much emphasis on including the faith-based community in Government programming. I believe that the instinct to incorporate programs that are organic to the community, and are already working, was a good one. It is clear to me that case management services are prime examples of programs that should incorporate the faith-based community.

So, as you can see, circumstances have compelled me to clarify Congressional intent. The bill I am introducing today does two things. First, it makes Section 426 retroactive to 2005, so that it may cover Hurricanes Katrina and Rita. Secondly, it strikes the phrase ``qualified private organizations'' which has been misinterpreted to exclude the faith-based community. That phrase has been replaced with ``nonprofit or faith-based organization with experience in case management services.'' It is unfortunate that we have arrived at the point where a legislative solution is needed. But nevertheless, I believe that this legislation resolves the problem, and will give comfort to the people of the Gulf Coast that Federal monies are being spent wisely, and given to those that have shown themselves capable and willing to help.

Mr. President, I ask unanimous consent that the text of the bill and letters of support be printed in the Record.

Mr. President, almost a year ago, we passed a Homeland Security Appropriations bill. Included in that very large piece of legislation was a small provision that probably went beneath most people's notice.

Section 426 of that bill allows Federal funding to provide case management services after a disaster. That has been a tragically absent component to our circumstances in Louisiana. Educated people struggle to find their way through the Byzantine morass that is FEMA individual assistance program, the Small Business Administration's loan program, the Road Home program and their own insurance company's requirements. Think of how all of this seems to working people who are encountering Federal bureaucracy for the first time.

So, we need case management badly. Unfortunately, Section 426 fails the people of my State in two important ways. First, and this predates the change in Congressional leadership, it allows for case management services--but only for future disasters. The legislation that I am introducing today makes Section 426 retroactive to 2005 and will now cover Hurricanes Rita and Katrina, as well as succeeding disasters.

Two years after the disaster, we only distributed half of the Road Home grants. It is obvious that we will need case management services for years to come in Louisiana. It is only common sense to direct these resources to the Gulf Coast today, where they are direly needed.

However, an equally important failing of Section 426 comes from its implementation. In New Orleans and throughout the Gulf Coast, the energy for the recovery effort has truly come from America's faith community. You can see their good work in neighborhoods that are returning in my hometown. You can see them with hammers and nails in the Gulf Coast towns of Mississippi, and you can find them helping thousands of victims of Katrina and Rita to navigate the bureaucratic hurdles between them, and rebuilding their lives.

As we have not had the benefit of Government supported case management, nonprofits and the faith-based community have stepped in to fill the obvious void. Unfortunately, the same community that has been such a lifeline to the people of the Gulf Coast has been barred from competing for Federal funding under Section 426.

This is a shocking turnaround for an administration that has put so much emphasis on including the faith-based community in Government programming. I believe that the instinct to incorporate programs that are organic to the community, and are already working, was a good one. It is clear to me that case management services are prime examples of programs that should incorporate the faith-based community.

So, as you can see, circumstances have compelled me to clarify Congressional intent. The bill I am introducing today does two things. First, it makes Section 426 retroactive to 2005, so that it may cover Hurricanes Katrina and Rita. Secondly, it strikes the phrase ``qualified private organizations'' which has been misinterpreted to exclude the faith-based community. That phrase has been replaced with ``nonprofit or faith-based organization with experience in case management services.'' It is unfortunate that we have arrived at the point where a legislative solution is needed. But nevertheless, I believe that this legislation resolves the problem, and will give comfort to the people of the Gulf Coast that Federal monies are being spent wisely, and given to those that have shown themselves capable and willing to help.

Mr. President, I ask unanimous consent that the text of the bill and letters of support be printed in the Record.

Mr. President, today I come to the floor to report the FHA Modernization Act of 2007. This is vitally important legislation, and I want to take a moment to express my thanks to Senator Martinez for his very close collaboration and support in putting this legislation together. This is an original bill produced by the Senate Banking Committee, and as such, the rules prohibit us from obtaining cosponsors. However, I would like to recognize Senators Reed, Schumer, Bayh, Menendez, Brown, Kerry, Murray, Whitehouse, Martinez, Voinovich, Cornyn, and Coleman for their support of this bill and for their offers of cosponsorship.

The mortgage markets--particularly the subprime market--are in the midst of a meltdown. Historically high default and foreclosure rates generated, in significant part, by abusive and predatory lending practices, are threatening millions of American families with the loss of their most significant financial asset--their homes--at a cost of over $160 billion in home equity, according to testimony presented before the Banking Committee.

While these problems are addressed, we need to make sure that credit is available, including for subprime borrowers, on fair terms so that the people of this country have an opportunity to build wealth for the future.

A revitalized, strengthened, and modernized FHA can be and, under this legislation, will be a source of this constructive, wealth- building credit, both

for new homeowners and for people who are seeking a way out of the abusive loans in which they are currently trapped.

In short, by providing low-cost credit, without prepayment penalties, without teaser rates, and without other deceptive terms, FHA is a part of the solution to the predatory lending crisis we are experiencing.

Moreover, FHA has traditionally been an important tool for creating new minority homeowners, and for lower-, moderate-, and middle-income families to become homeowners. By modernizing FHA, we will help millions of families achieve their American Dream. FHA is in a strong position to play this role: an independent audit report indicates that FHA has a record $22 billion in capital, and a capital ratio, 6.82 percent, that is more than three times higher the mandated level of 2 percent.

The bill passed by the Committee, and which is being filed today does a number of important things: it raises FHA loan limits so that the program can reach many more people; it lowers downpayment requirements, while still ensuring that people will have a real stake in their new homes; it expands the reverse mortgage program for elderly homeowners by both raising the loan limit and removing the current cap on the number of these mortgages FHA can insure. I know Senators Reed, Crapo, and Allard strongly support this program; it reduces the origination fee that elderly homeowners can be charged for these mortgages by one- quarter, from 2 percent to 1.5 percent making it more affordable for seniors to take out these loans; and, it includes a major overhaul of FHA's manufactured housing program, authored by our colleagues Senators Bayh and Allard.

Taken together, these changes will help make FHA a more relevant and effective program. This legislation is supported by the Mortgage Bankers Association, the National Association of Home Builders, the National Association of Realtors, AARP, the Manufactured Housing Association, the Manufactured Housing Institute, and others. I urge my colleagues to support this bill.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.