Neighborhood Preservation Act

I yield myself as much time as I may consume.

Mr. Speaker, I rise in support of the Neighborhood Preservation Act, a bill that I introduced with my colleague from Indiana, Joe Donnelly, who I want to thank for his support on this. This bipartisan legislation is supported by Chairman Frank and Ranking Member Bachus of the House Financial Services Committee, who are both cosponsors of the bill.

This bill amends the Federal Deposit Insurance Act to authorize depository institutions and their holding companies to lease foreclosed properties held by institutions for up to 5 years while ensuring the safety and soundness of such activity. H.R. 2529 would provide a tool to address the current foreclosure crisis. Today the American economy is suffering from an overburdened inventory of available houses for sale, roughly estimated at a 10-month supply. In some areas of the country, distressed sales have reached almost 90 percent of the houses being sold which are continually driving down home and neighborhood values. In my district, distressed sales represent approximately 86 percent of homes on the market in San Bernardino County, 65 percent in Los

Angeles County, and almost 50 percent in Orange County. In fact, foreclosures have caused prices to decline in California alone by 30 percent in recent months, and they continue to be a problem.

To address the inventory surplus and help stabilize the housing market, the Neighborhood Preservation Act would allow banks to temporarily--and I emphasize temporarily--lease foreclosed properties. Under the bill, the prior homeowner would have the opportunity to lease a property and could be given the option to buy back the home. By allowing a family to lease a property rather than abandon it, families would be given a chance to remain in their homes until they have the means to own again. This legislation would also enable the lender to sell the property within 5 years into a more stable market; thereby, potentially recovering all or part of the losses that could otherwise have occurred in an immediate sale in a saturated market. The Neighborhood Preservation Act would not only reduce the number of houses being sold, but it would help preserve the physical condition of foreclosed properties, which would ultimately help stabilize the aesthetics and economic value of neighborhoods and communities. This would minimize the negative impact on surrounding homes and neighborhoods that have been impacted by the unrelenting foreclosure crisis.

To ensure bank solvency, this bill would require the Federal bank agencies to establish criteria and minimum requirements for the leasing activities of any depository institution, including minimum capital requirements that the agency determines to be appropriate for the preservation of the safety and soundness of the institution. The bill explicitly states that ``it is the intent of Congress that no permanent change in policy on leasing foreclosed property is being established with respect to depository institutions'' and their ``holding companies.'' The purpose of this bill is to mitigate the impact of the oversupply of homes on the marketplace and allow individuals the chance to stay in their homes during these exigent circumstances.

Mr. Speaker, at no cost to the taxpayer, this bill will help preserve properties and communities, provide more confidence in our housing markets, and assist in stabilizing the economy.

At this point, I reserve the balance of my time.

In recent years, many of you recall that there have been concerns about allowing banks to get involved in the real estate marketplace, specifically being involved in housing sales and housing transactions other than for pure lending purposes.

So before I introduced this bill, I went to all the associations to make sure the understanding was that this was clearly a temporary bill. This bill has been endorsed by the National Association of REALTORS, which mainly had a huge concern with banks being involved with real estate, the National Association of Homebuilders and the National Association of Mortgage Brokers. This bill was discharged from committee without a hearing because the ranking member and the chairman both believed this bill could really have a major impact. That's why this bill is on the floor. I ask for an ``aye'' vote.

I yield back the balance of my time.

Mr. Speaker, today I rise in strong support of H.R. 2529, the Neighborhood Preservation Act, which I joined my colleague from California, Mr. Gary G. Miller, in introducing.

This bill would amend The Federal Deposit Insurance Act to allow depository institutions like banks to temporarily lease a foreclosed property for up to 5 years. This bill is a fiscally responsible way to help mitigate the damage of the housing crisis and does not cost the government any money. The President has recently spoken in support of this idea. We hope that banks will utilize this to mitigate damage to hard-hit communities and prioritize working with the foreclosed family first.

My home State of Indiana ranks 13th in the country for number of foreclosures. Our district has felt the pain of the economic downturn, as many have lost jobs and struggled to make ends meet. Like many Americans, we have found ourselves unable to pay our mortgages and faced with foreclosure, and that is what has happened to many families in our district.

When a bank is forced to foreclose on a home, many people suffer. The family suffers as they are forced to find a new place to live and new schools for their children. One foreclosure can depress an entire neighborhood by decreasing the values of surrounding properties, and the depository institution that holds the mortgage no longer receives payments on the home. H.R. 2529 would help to minimize the impact of foreclosure by allowing depository institutions to rent a foreclosed property for up to 5 years to the previous owner or to another owner. Allowing depository institutions to lease the foreclosed property gives families a chance to stay in their home and to make payments as a renter until they have the means to become an owner again. It does so without adding any cost to our deficit. Not only does this help provide some relief to the former homeowner, it helps to preserve the economic values of surrounding homes in the neighborhood, and it provides stability in the housing market. The number of foreclosed homes on the market have contributed to an oversupply of unoccupied homes. Having a high number of unoccupied bank-owned homes negatively impacts whole communities and can even drive up crime, as these vacant homes can become havens for squatters. There are 19 million vacant homes across the United States. That's up from 15.7 million only 4 years ago. These homes present a number of safety concerns. By allowing a family to reside as a renter, they're able to care for the property and prevent further adverse consequences. This bill is a temporary measure that can serve as a useful tool to keep excess housing stock off an already saturated market.

I want to thank the gentleman from California for his work on H.R. 2529, and I'd like to thank Chairman Frank and Ranking Member Bachus for their support on this important piece of legislation. I urge my colleagues to support H.R. 2529.

Mr. Speaker, I urge my colleagues to support H.R. 2529. This bill is a very, very positive step for the homeowners, for our neighborhoods, as well as a way to help solve the problem of foreclosed homes in America. So I urge Members' support.

Mr. Speaker, I am pleased to submit my support of H.R. 2529, the Neighborhood Preservation Act. This Act will allow depository institutions and their affiliate entities to lease foreclosed properties for up to five years- it also has a provision which would allow for people to sign leases with the intent to purchase.

The Neighborhood Preservation Act is a commendable approach to utilizing the growing inventory of foreclosed properties and putting American families back into homes. Allowing foreclosed homes to be leased is a win-win situation. This allows people who may not be financially positioned to buy a house an opportunity to live in and potentially purchase a home while also allowing the bank to get some of the money back from the foreclosed property.

Additionally, by allowing depository institutions to lease foreclosed properties, we will put people in homes and begin to reduce the housing inventory overhang that is currently causing downward pressure on home values. This will help stabilize the housing market and will help facilitate the recovery of the greater economy.

Communities throughout the nation will benefit from this legislation, and it could not have come at a more opportune time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2529) to amend the Federal Deposit Insurance Act to authorize depository institutions and depository institution holding companies to lease foreclosed property held by such institutions and companies for up to 5 years, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Mr. Speaker, I yield such time as he may consume to the gentleman from Indiana (Mr. Donnelly), a chief sponsor of this legislation.

Mr. Speaker, I have no further requests for time, so I will let the other side close.

Mr. Speaker, I have no further requests for time, I urge my colleagues to support this bill, and I yield 1 minute to the gentleman from Indiana (Mr. Donnelly) to close.

I yield back the balance of my time.