Providing for consideration of the bill (H.R. 1106) to prevent mortgage foreclosures and enhance mortgage credit availability.

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

I thank my colleague from Florida for yielding us the time on this rule, and I also want to say that I thank very much the chairman of the Judiciary Committee, Mr. Conyers, for his help yesterday in the Rules Committee meeting on incorporating a suggestion that I made into the manager's amendment. It didn't make it in this bill in the form of an amendment, but he was very kind to include that, and I think it made this bad bill a little bit better.

I want to say that my colleague from Florida has made some very eloquent comments about why this rule should be adopted and why the underlying bill is such a good bill. However, those of us on this side of the aisle have some clear concerns about this rule and about the bill and what it is going to be doing to our economy.

We heard yesterday a lot of numbers that were very, very difficult to pin down. In fact, I tried very hard, knowing I was going to handle this rule this morning, because I wanted to try to get a handle on the number of people that we are talking about.

We heard the number 14 million. We heard 14 million now and more later. But we also heard that what this bill will do will be to allow the bankruptcy system to handle about 30,000 new cases per year. My guess is that while this bill claims not to be needing a lot more money in that area, that eventually our colleagues across the aisle are going to come back asking for more money to deal with this issue.

But what I want to talk about today a little bit is both the process and about the reason why the rule should not be adopted and the bill should not be adopted. 94 percent of the people in this country are now paying their mortgages and paying them on time. What's going to happen if this bill is passed is that those people, and people in the future, are going to be punished. We are continually punishing the people who play by the rules and rewarding the people who don't play by the rules. It is a real shame that we have come to that place in our society because we don't want to set that as the norm for what we're doing in this country, because we've always had the rule of law and we've operated very well. What separates us from most other countries is that.

And yet, now we're going to say to people, it's okay if you go out, misrepresent your position in terms of being able to pay for your mortgage or do any kinds of things like that, and then we'll bail you out. It will be okay for us to do that. And that, basically, is what this bill is, the message that we're sending.

But let me talk just a bit about the process that was involved in bringing this rule to us. We had a very lively debate in the Rules Committee yesterday. The chairman of the Financial Services Committee told us that he was very willing to accept some of the amendments that had been offered. They might not exactly fit in the Financial Services Committee, but he was willing to work with some of our Members to make those fit.

We had 20 amendments offered, Republicans did. Only one of those amendments was accepted to be offered today, and it looks like we may have a problem with that amendment once it is offered.

We are trying very hard to be bipartisan. We want to work with the majority on helping the people in this country who are truly hurting, who have played by the rules and who are being hurt by the economy, through no fault of their own. However, what this bill, again, is going to do is it is keeping us from being bipartisan. We have to be opposed to the rule and opposed to the bill because they've put together bills that should not be put together. Many of us could probably support the Financial Services part of this bill, but we would be very concerned about the Judiciary part of it. But no, the majority has to lump them all together and create a situation that denies our ability to be bipartisan.

A couple of the rules that were offered yesterday and in the various committees that Chairman Frank said he was willing to have a debate on was a rule offered by Representative Neugebauer which would amend the servicer safe harbor provisions to provide that unsuccessful plaintiffs would pay all the attorney's fees and any legal costs incurred by the defendant.

Another one by Congresswoman Capito would exempt the Federal Housing Administration, Veterans Administration Loan Guaranty Program

and Guaranteed Rural Housing Loans from adjustments to the terms of the loan in bankruptcy. These already are very, very lenient programs and, supposedly, all the work has been done so that there would not be the need to go to bankruptcy.

Also, Congressman Hensarling offered, I offered on his behalf, three excellent amendments that would, I think, help with the issue of responsibility and accountability. The President talks a lot about that, but when it comes down to implementing those things in legislation, we see nothing coming from the majority on those issues.

Let me mention the Hensarling amendments which were denied, and we can't even vote on them. One would exclude from participation in the HOPE for Homeowners Program any borrower whose original loan was a zero down payment loan. Many of these people are treating these homes that they bought like rental property. They have no investment in them, and so when the economy goes south or the home is not worth as much as they thought it was worth, they just walk away from it. That's no sense of responsibility. We're just, again, rewarding irresponsibility.

Another amendment by Congressman Hensarling would exclude from participation in the HOPE for Homeowners Program any borrower whose original loan documentation did not include verification of the amount and source of income. A lot of these loans were given out to people who did not bring information on their income. That seems a logical thing to do. Most people, again, who are paying their mortgages are people who paid something down and then were able to show that they could pay for the home ultimately.

And then the third one would have excluded from participation in the HOPE for Homeowners Program any borrower who has a family income that exceeds 125 percent of the area median income for where they live. Republicans are usually the ones criticized for helping wealthy people, but this bill is going to allow millionaires to be able to get help. We don't think that that's the right thing to do.

Those were three very logical amendments that were turned down. As I said, only one out of 20 of our amendments was accepted. So we think that this is a bad rule. We think it's a bad bill and we're going to urge our colleagues to vote ``no'' on it.

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

Mr. Speaker, I would now like to recognize for 5 minutes my distinguished colleague from Iowa (Mr. King) to discuss the amendment that he had written that I offered last night in the Rules Committee, which was rejected. And I think he will share some very enlightening comments with us.

Mr. Speaker, I mentioned before that 94 percent of the American people are paying their mortgages and are paying them on time, and they don't understand why this is happening and why they should be burdened with having to pay off the mortgages of people who are not being responsible and who are not being held accountable.

I want to share with you an article that came out in The Washington Post last December about the HOPE Program and about the situation that we're dealing with. When I read the article, it made me realize that our colleagues across the aisle are simply not in touch with reality. They don't have any idea about how the real world works. Most of them have not been in business. Most of them have not had to meet a payroll. They're living sort of in a Never Never Land, and I'm going to quote some things from this article that, I think, will help the public understand what that is.

There is criticism about the bill from the HUD Secretary. Now, that HUD Secretary was in the last administration, and there is a lot of blame back and forth between Congress and the executive branch. This is what the HUD Secretary said:

``What most people don't understand is that this program was designed to the detail by Congress.''

So that bill was passed. The bill setting up the HOPE Program was passed under the Democratic Congress. It also shows how off their numbers are in so many cases when they make predictions. They said the 3-year program was supposed to help 400,000 borrowers avoid foreclosure, but between October and December of last year, only 312 applications had come into the program.

Let me tell you a little bit about why that is the case and why, I think, people who irresponsibly got mortgages to begin with continue to look for bailouts and continue to look for welfare. This is basically expanding the welfare program in our country by passing this bill. Here is what one of the people said who is working with those people who might benefit from the program:

``Getting the lenders to agree has been our biggest challenge,'' said Peyton Herbert, director of the foreclosure services at HomeFree-USA, a housing counseling firm in Hyattsville.

This is what he says. This is the ridiculous way that these folks respond to this. He says, ``The lenders want dollar for dollar what's owed on that loan or something close to it. That's the fly in the ointment.''

Imagine that. People who loan other people money want them to pay it back dollar for dollar. Isn't that an unusual situation? But that's the way most of us operate in this country. However, most of these people who got these loans and who are in trouble now got them because they never expected to pay them back. They expected somebody to bail them out. They weren't honest when they got the loans, and now they're going to be bailed out by this legislation.

The other thing, which is just mind-boggling to me, is how the press writes these. Okay. ``The number one impediment is the lenders will redo their loans if the people promise to pay them back.'' Now, that's the way it usually operates, but the article goes on to say, ``The list of impediments goes on.''

That's the attitude of The Washington Post. There is an impediment given out there to the people who want to redo their loans. Do you know what that impediment is? That the people who are getting these loans, if their home increases in value, they have to split that value with the Federal Government, which is underwriting their loan, if they sell the home; and the people don't want to do that.

Again, there is no sense of responsibility. We didn't hear the President the other night talk about personal responsibility, personal accountability. He uses those words a lot, but he never pins them on anybody. It's just unbelievable that that's the attitude that people have. They could be getting help that already exists out of the HOPE Program, but they don't do it because

they don't want to pay the money back, and they don't want to share the increase in value with the Federal Government, which is underwriting their mortgage, if they ever sell the home.

Again, I think they're living in a Never Never Land. They think that they're due this money for free. They've been taught to live in a welfare society. We're continuing the welfare mentality. We're going back to welfare that was done away with when the Republicans took over the Congress in 1995. That is not what the American people want.

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

Mr. Speaker, I want to say there is another issue here related to process that, I think, we need to talk about.

Many people say that the American people's eyes glaze over when we talk about the process here and that they don't really care, but I think we showed a couple of weeks ago that they do care and that they're watching and that they're paying close attention to what's going on in Congress, because the American people believe in fair play, and they believe that we should play by the rules.

So often, Congress passes bills and exempts itself. It often passes rules, and the majority exempts itself. One of the ways that Congress is exempting itself or that the majority is exempting itself right now on this bill, on this rule, is with something they call PAYGO. Now, the majority party 2 years ago made a big splash and got a lot of great publicity, saying, ``Everything is going to be pay as you go.'' It's abbreviated PAYGO. ``We're not going to do any more spending unless we cut spending somewhere else. We want to be diligent.''

They criticized Republicans for years on the deficit. They criticized Republicans for spending too much money. They were going to show that they were different. Yet what have they done every time they've gotten a major bill they've wanted to pass? They've just waived the PAYGO rules. It's real simple, and it usually doesn't get a lot of publicity because they got all that great publicity for saying that they weren't going to do that, but that's what's happening here, ladies and gentlemen. The PAYGO rules have been waived on this bill.

They don't want to show the American people how again they're abusing their own rules, how they're being unfair to the American people because they're saying one thing and they're doing another. They say, We want to bring down the deficit. We want to curtail spending. What they're actually doing, as I said earlier, is bringing back the old welfare system. We saw that with the stimulus bill. We saw it with the appropriations bill. It's back to the old style of welfare. We don't have to ask people to work to draw welfare payments. No. Let's just get rid of that. Let's extend the payments. Let's increase the payments. Let's put more people on welfare. That's exactly what this bill does. We're simply going to be increasing welfare.

The way they do that is to say, By passing this bill, we don't have to show how we're not increasing the deficit, so we'll just waive that rule, and nobody is going to notice it. Well, I think the American people are noticing that. I think they are paying attention.

Again, the majority of the American people who are paying their mortgages, who are playing by the rules, who are going to work every day, and who are doing their jobs are getting sick and tired of the increase in the welfare system again. Here you go. The Democrats have been in charge of the Congress for a little over 2 years, and what do we see but a massive increase in welfare.

I appreciate my colleague talking about the President saying he was going to be responsible, that he was going to be held accountable, but you know, we've not seen anything written into legislation so far. I've asked about that. Again, I appreciate very much Chairman Conyers putting a little piece in this bill about accountability. I think that was good.

We're going to look at bankruptcy judges, see if they're abusing their power, make sure we have some idea of what they're going to be doing. We give them 2 years to make that report--it's plenty of time-- but I have great concern over the fact that the majority party has waived the PAYGO rules on this bill. That's a part of what they're doing, and I think the American people are concerned about that, too.

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

Mr. Speaker, I reserve my time.

Mr. Speaker, could I inquire of the gentleman from Florida if he has any more speakers?

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

Mr. Speaker, you know, we hear all this talk about bipartisanship. Bipartisanship to the other side, to the majority party, means do it my way. That's what bipartisanship means to them. Bipartisanship to us means how about we have a discussion? How about we bring up some amendments and have some votes on them? If you're so sure that your position is right, bring those amendments up for a vote. Let's see what kind of votes they're going to get. No. They won't even allow amendments to be voted on. That's not bipartisanship.

We had 20 amendments offered for this bill. Only one was accepted. That's not bipartisanship. Bipartisanship would be, again, bringing up lots of Republican amendments. Let them be voted on. Again, people who are sure of their position aren't afraid of having votes on alternative points of view.

Again, the American people are watching us. They're watching this Congress, and we know the Congress is putting off some tough votes they don't want to deal with right now because they know the American people are watching. And you know, that's one of the best things that I think has come out of last year's election and, perhaps, the economic uncertainty.

People are suffering. Republicans are concerned about that. We want to do everything we can to help those people who are suffering. But what this Congress has done so far hasn't helped those people who are suffering. It hasn't helped the people who are working and lost their jobs through no fault of their own.

We want bipartisanship, but it should be true bipartisanship. It's not ``do it our way or do it not at all.''

You know, I respect my colleague from California who just spoke and said that this bill doesn't cost taxpayers anything; it only costs the lenders. Well, who are the lenders? They're banks that are owned by stockholders. Those, the last time I looked, were taxpayers. They're the real taxpayers. That, again, is part of the out-of-this-world mentality that the people on the other side of the aisle have. It doesn't cost anybody.

I had people in my office and they said, ``Oh, this bill doesn't cost anything.'' I said, ``Pardon me? You mean they're going to cram down the mortgages, they're going to reduce the amount of the mortgages? Who's going to pay the difference between the original amount and the cramdown amount?''

``Oh, those are the bankers. But it just means they won't be as rich as they were before.''

That's not the way this country operates. ``Cramdown'' is the right name for the people talking about part of this legislation. That's exactly what it is. And what are we doing here?

You know, the New York Post--not exactly known as the most conservative newspaper in the world--calls it the Foreclosure Five. What we are doing is we are bailing out people in five States. And is it any surprise that those five States are California, Nevada, Arizona, Florida, and Michigan? Where is the leadership in the majority party? California and Nevada. Is it surprising?

This is just more earmark legislation, ladies and gentlemen. More earmarks. We're bailing out these five States.

This is not a crisis of a national proportion. This is a personal matter, not a national crisis.

Falling home prices are not the problem. Home prices went up tremendously for several years. Everybody knew that was going to have to come to a halt. Again, people living in this world knew that. People who had a real-world mentality understood that. But if you're living in Never Never Land, if you're living on the welfare mentality, then you assume you can behave any way you want to and somebody is going to bail you out. And that's what this legislation does.

Lots of newspaper articles and magazines have said, ``What this plan is doing is undercutting the banking and private sectors, and hurt many honest, hardworking people.'' That's a commentary from the Street. Over and over and over again we hear, ``we're subsidizing bad behavior,'' an article in the National Review. And that's exactly what this legislation does, it subsidizes bad behavior.

This is a sham. It is hurting average Americans who pay their bills, who do their work. You know, I think that the majority party has an addiction to spending other people's money, and that's what this does. Again, saying it doesn't cost the taxpayers anything is ridiculous. It's going to cost the taxpayers a lot of money, both directly and indirectly. And I want to say that this is a bad bill, it's a bad rule, and I want to urge my colleagues to vote ``no.''

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

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

Mr. Chairman, this bill is a joint product of two committees: the Committee on the Judiciary and the Committee on Financial Services. I very much appreciate the fully cooperative relationship that the gentleman from Michigan and I and the members of the committee staffs have had. Working with him has been a pleasure as he has taken the lead in the more controversial parts of this bill. I say controversial not in denigration but in support.

I think the bankruptcy provisions--which are the product of the Judiciary Committee, not the committee I chair--are essential. I was particularly struck--and I will enter into the Record letters from the National Council of Life Insurers specifically approving the bankruptcy provision, and from the National Association of Realtors also approving the bill.

Obviously, there are people entitled to a variety of opinions, but I think it's relevant to note that two important groups, one involved in housing--the Realtors--and another very, very much involved in finance--the Life Insurance Council--support the bill including the bankruptcy provision.

There is another reason why bankruptcy is relevant to some of the things in the jurisdiction of our committee. Even where there are people willing to modify mortgages, there are some legal tangles. We have this form of a servicer. A servicer is an entity which has been given control or authority over packages of mortgage securities. Even in cases where the servicer has been willing, in some cases, to do a modification, that entity is facing lawsuits from investors who say you can't do it.

There are also second mortgages, that is, even in cases where there are a lot of willing parties to this on both the lender and the borrower's side, the fact that there is such a tangle of legal rights has been an obstacle. Bankruptcy is the only way to cut through that. And given the moderate way in which bankruptcy has been put into this bill, that adds to--let me put it this way, people are saying let's have voluntary modification. But some modifications that are supported by almost everybody cannot go forward because of this.

Beyond that, this bill has some things that are widely supported. For instance, the increase in the insurance deposit limits is supported by the community banks and the National Federation of Independent Business and almost every other group. It does provide to the servicers to whom I just alluded a protection that was a bipartisan production of the gentleman from Delaware (Mr. Castle) and the gentleman from Pennsylvania (Mr. Kanjorski) to say that if you as the servicer modify a loan that you hold on behalf of an investor in ways that will minimize the loss to the investor, you could not be successfully sued because you will have carried out your obligation. It authorizes the payment of a fee of up to a thousand dollars to servicers for modifications because this is a job that many of them did not expect.

It also improves the HOPE for Homeowners program which, when we passed it in July, had some hopes and they weren't realized; and I will acknowledge that we didn't do that well. We were at the time responding to pressures that said don't be too generous. As a result, particularly after the Senate got through with it, it became unworkable.

The impetus for change came in part from the Bush administration. The FHA, under the Bush administration, Secretary Preston and Commissioner Montgomery, said you've made this unworkable. So we have amendments that would make it workable. And what we hope coming together is this: no one ought to be encouraged to go bankrupt or think bankruptcy is an easy path. We do prefer voluntary modifications.

What we have is a package, along with the very good proposals enunciated last week by the President, worked on by Secretary Geithner and Secretary Donovan, who did an excellent job on it, we have a menu of ways using all the powers of the Federal Government, including authority, by the way, that we first gave the administration, the Bush administration, in the TARP bill, which they sadly refused to use. But this administration is using authorities that were given to the Bush administration through Fannie Mae and Freddie Mac, through the TARP, through other ways, through the FDIC and other bank regulators. This enhances the authority to do modifications.

So the result--and this is why it's a package. We strengthen the community banks, in particular, with this increase in the deposit insurance; we provide a set of options other than bankruptcy to modify; and we remove legal obstacles, to the extent we can constitutionally do so, to such voluntary modifications. But we then believe that in some cases, you will still need to go to bankruptcy to deal with these tangles that I mentioned, and we also believe that the fact that there is a bankruptcy looming will be an encouragement to negotiations.

On both the lender's and the borrower's side, we've heard complaints that they have tried to communicate with the other. Some people say, ``I wrote to my lender. He didn't answer.'' Some lenders say, ``I wrote to the borrower. She didn't respond.''

One of the things that the Judiciary Committee did very well--and I think they did an excellent drafting job on this bill--is to say that if you want to go bankrupt, you have to notify your lender and then there is a waiting period.

So this will promote exactly the kind of communication between lenders and borrowers that we hoped would go forward.

National Association of Realtors,

Washington, DC, February 24, 2009.

Dear Representative: When people lose homes to foreclosure,

our communities, the housing market and our economy all

suffer. The National Association of REALTORS'

believes H.R. 1106, the ``Helping Families Save Their Homes

Act,'' includes provisions to minimize foreclosures,

stabilize home values and move the country closer to an

economic recovery.

The bill provides a safe harbor for mortgage servicers who

conduct loan modifications in good faith. Currently few loan

modifications are occurring because servicers face the threat

of investor lawsuits. This provision will relieve servicers

from liability, and allow more loans to be modified.

The bill also reforms the Hope for Homeowners program,

allowing more borrowers to refinance into safe, affordable

mortgages. Despite being well-intentioned, the Hope for

Homeowners program has enjoyed very limited success. The

program's constraints have made it very difficult for lenders

and servicers to participate. H.R. 1106 eases current

restrictions and makes the program more useable, while still

preserving the benefits to homeowners and limiting risks to

the FHA fund and the American taxpayer.

The bill strengthens oversight of FHA-approved lenders. FHA

is experiencing unprecedented volume during this mortgage

liquidity crisis. More and more lenders want to become

involved with FHA. To ensure that predatory lenders are

unable to participate, the bill provides a number of

safeguards to protect the FHA fund and taxpayers from fraud

and abuse.

As progress continues on the bankruptcy provisions within

this bill, NAR would support reasonable and equitable

requirements for judicial review of loan terms for homeowners

who are forced into bankruptcy because they are unable to

qualify for or obtain foreclosure prevention assistance.

The National Association of REALTORS' believes

H.R. 1106 will help millions of homeowners who are at risk of

losing their homes. It will also help neighborhoods avoid the

ramifications of foreclosures and will help our economy on

the road to recovery. We ask you to support this important

bill.

Sincerely,

Charles McMillan,

2009 President.

I yield 1\1/2\ minutes to the gentleman from Oregon (Mr. Blumenauer).

I will yield myself such time as I may consume because the gentleman from California wants to talk about the history and who pressured people into doing this.

Yes, it's true, there is a governmental role here: it is a refusal to regulate subprime loans. In 1994--and party is relevant--the last time before the previous Congress that the Democrats were in the majority, this Congress passed a law directing the Federal Reserve to regulate home loans in the subprime category that were issued by everybody. Bank loans were regulated, nonbanks were not. Alan Greenspan, the Chairman of the Federal Reserve, refused to use the authority and acknowledged in testimony before the Committee on Government Reform late last year that he had refused to use it and that he was mistaken.

So, part of the problem was, yes, there was a lowering of standards because the Federal Reserve refused to impose them. And then, let me quote Mark Zandi, who had been an adviser to John McCain, is now an economist of great repute--he was then, too, obviously--who notes in his book on this crisis that in 2004, the Bush administration decided, as part of its strategy of expanding homeownership, to push for an increase here, including, in 2004, the Bush administration ordered Fannie Mae and Freddie Mac to increase the number of loans they gave to people below the median income. And I will put into the Record my quotation at the time from an article put out by Bloomberg in which I objected to that. Secretary Jackson made them increase by 10 percent the number of loans they had to give to people below the median. And I said I thought that would be bad for Fannie and Freddie and bad for the borrowers because helping people borrow money they can't repay does them no good. And there was then an effort to try to get legislation passed to do what the Federal Reserve refused to do under Mr. Greenspan, regulate subprime loans. But the Republican leadership of the House at the time said we don't want to do this.

There was also concern about Fannie Mae and Freddie Mac. And in 2005, I, as the ranking minority member of the Committee on Financial Services, joined the chairman, a former colleague, Mr. Oxley, in supporting a bill out of our committee to tighten the regulation of Fannie Mae and Freddie Mac. I later was opposed to what was done in the Rules Committee to weaken a housing provision, but I wanted the bill to go forward. And, in fact, that bill went to the Senate with a large majority. I opposed it on the housing ground, but I was for the regulatory part. The Bush administration rejected it. Then Secretary of the

Treasury Snow said he thought the President was wrong. Mr. Oxley said he was very disappointed that the administration wouldn't go forward.

In any case, the Republican-controlled Senate refused to take the bill up. So from 1995 until 2006, under Republican control of the Congress, no bill was passed to regulate Fannie Mae and Freddie Mac better, and nothing was done to restrain inappropriate subprime mortgages.

In 2007, the Democrats returned to the majority. Within 4 months, the Committee on Financial Services had reported on exactly the bill that the Bush administration wanted under Secretary Paulson to tight the regulation of Fannie Mae and Freddie Mac. There was an organization called FM Watch that existed to try to tighten regulation of Fannie Mae and Freddie Mac, and they have been quoted as saying, after the House acted, ``Well, we finally got what we wanted.'' That was in 2007.

So, yes, I regret the fact that in 2005 there was an intra-Republican split between Mr. Oxley and the President, with the Secretary of Treasury on Mr. Oxley's side and Senator Shelby on the President's side, and we got no bill. We got it through the House in 2007. It was then delayed in the Senate, unfortunately. In 2008, I asked the Secretary of the Treasury to put it into the stimulus, the tough regulation of Fannie Mae and Freddie Mac. He couldn't do that at the time. We got it, but we got it too late. But we got it too late because 12 years of Republican rule went by and no bill became law.

Then we had subprime. When we were unable to pass a subprime bill in 2005 because the Republican leadership said no, we, in 2007, brought out a subprime bill. It passed this House. It was a bill to restrict inappropriate subprime loans. It was attacked by the Wall Street Journal--I'll put the editorial in there--it said it was ``Sarbanes- Oxley for housing,'' that we would be depriving people of the chance to buy homes--yeah, people who shouldn't have had that chance. Once again, that was held up in the Senate. But to his credit, Chairman Bernanke, a Bush appointee, used precisely the authority that Alan Greenspan refused to use from 1994, from that statute, and imposed strict restrictions on bad subprime loans.

I think we will go further. And I expect the Committee on Financial Services once again to bring out the bill to restrict inappropriate subprime loans. And I will look for that energy that I've heard from time to time expressed by some of my Republican colleagues about keeping people from being put into homes they shouldn't have. Because last time it was a more partisan fight than it should have been, although the ranking member, who has a very good history of being concerned about this, did join us in voting for the bill.

The only other thing I would say is this--and I would agree that voluntary modification is a good thing. But with the servicer-investor conundrum and with second mortgages, even almost entirely voluntary agreements to modify cannot go forward without bankruptcy.

Fannie, Freddie To Suffer Under New Rule, Frank Says

(By James Tyson)

June 17 (Bloomberg)--Fannie Mae and Freddie Mac would

suffer financially under a Bush administration requirement

that they channel more mortgage financing to people with low

incomes, said the senior Democrat on a congressional panel

that sets regulations for the companies.

The new rule compels the companies to put 57 percent of

their mortgage financing by 2008 toward homes for people with

incomes no greater than area median income. Fannie Mae and

Freddie, the two largest U.S. mortgage finance companies,

must currently meet a 50 percent threshold.

The White House ``could do some harm if you don't refine

the goals,'' said Representative Barney Frank, a member from

Massachusetts on the House Financial Services Committee.

Frank's comments echo concerns of executives at the

government-chartered companies that the new goals will

undermine profits and put new homeowners into dwellings they

can't afford. ``At their outer edges they become

counterproductive--there are not loans to make that will get

repaid,'' Freddie Mac Chief Executive Richard Syron said

Monday in an interview, referring to the new financing rule.

Frank said the administration is aiming to reduce the role

of the two companies in mortgage financing, and has seized on

the higher goals ``as a useful stick by which to beat Fannie

arid Freddie.''

HUD Defends Rule

Alphonso Jackson, secretary of Housing and Urban

Development, said the Bush administration has no hidden

motives in seeking to raise the percentage of financing for

low-income homeowners.

``There is no administration more supportive of Fannie and

Freddie than we are,'' Jackson said today in interview. ``We

are just actualizing what should have been done years ago.''

An agency within HUD, the Office of Federal Housing

Enterprise Oversight, regulates Fannie Mae and Freddie Mac,

which own or guarantee about half the $7.3 trillion U.S.

mortgage market.

The housing guidelines, subject to a public comment period

that ends on July 2, would become law Jan. 1. Referring to

both the White House plans and the coming presidential

election, Frank said, ``nothing can stop them except a change

in November.'' He spoke at a news conference sponsored by the

presidential campaign of Senator John Kerry of Massachusetts.

Frank and housing industry representatives such as Jerry

Howard, chief executive of the National Association of

Homebuilders, say the White House rules fail to focus

financing on multifamily housing and other market segments.

The regulations also don't address a decline in refinancing

and other market changes, they said.

``We don't see how these goals in any way put Fannie Mae

and Freddie Mac into specific types of affordable housing,''

Howard said.

The association, which represents Centex Corp., Toll

Brothers Inc. and about 215,000 other companies in the

housing industry, plans to ask for a 60-day extension of the

public comment period, Howard said.

Referring to the housing goals and the two companies, Frank

said, we want to push them further, but it doesn't make sense

to push them in an undifferentiated way.''

Jackson said his critics should withhold judgment until

after Jan. 1. ``I don't see how people can say something is

not going to work when we have not had a chance to implement

it.''

Mr. Chairman, I will now yield 1 minute to the gentleman from Pennsylvania (Mr. Kanjorski).

Mr. Chairman, in the absence of any correction, I have only one speaker left; so I will reserve the balance of my time.

Mr. Chairman, I yield myself 10 seconds.

The gentleman from Georgia asked about what other contracts. This is precisely the bill to make this like other contracts. Everything else can be declared void in bankruptcy. So the gentleman has it absolutely backwards. This doesn't create an exception to general contract law. It amends one and makes this on the same footing as, quoting the gentleman, all other contracts.

Mr. Chairman, I yield the balance of my time to one of the leaders in the effort to preserve homeownership for deserving people in America and the fight against abuses, the gentlewoman from California (Ms. Waters).

Mr. Chairman, I move that the Committee do now rise.

I thank the gentleman for yielding.

I certainly applaud the committee for trying to do something about this problem, but I'm afraid that this is not the right solution. It actually seeks to help a few at the cost of all homeowners.

First of all, the government seems to be very content these days picking winners and losers. But I don't understand if Mr. Bachus is paying his mortgage and I'm not, why am I necessarily, just because of that, deserving to renegotiate the contract? What is it that the Federal bankruptcy judge will know about me which will make me have the insider advantage over my friend from Alabama? It doesn't make sense. The judge will have to decide, well, was I laid off because of something that I did? Did I bite off more than I should have chosen, because of my irresponsibility, because of the lender's irresponsibility? I think the precedent of this is extremely scary. And why only contracts that involve real estate? What about other contracts that people get involved with in terms of debt?

The fact of this is it's going to also not just put the government in a position of picking winners and losers, but it's going to put more uncertainty in the market. And right now, as I talk to Realtors and bankers and investors, what this market needs on Main Street and Wall Street is knowledge of rules. Rules that govern, regulatory practices, whatever they are, if they're here or if they're here, what Wall Street and the investment community needs to know is what are the rules? We will adjust to them. But here we go one more time increasing uncertainty by changing the rules.

Mr. Chair, the Helping Families Save Their Homes Act (H.R. 1106) would allow bankruptcy judges to reduce the principal owed on a mortgage, a practice often referred to as a ``cramdown.'' Judges would also be able to reduce interest rates or lengthen the term of the mortgage. This will help only a few people while raising the cost of borrowing for thousands of moderate-income and first-time homebuyers.

Although supporters claim that this is a limited provision that applies only to existing mortgages, the cramdown language can easily be amended to make it permanent at a later date--which would then be priced into future mortgages. In addition, the House bill lacks many of the targeted limitations designed to make sure that bankruptcy is a last resort. It even weakens language passed earlier by the House Judiciary Committee that was designed to keep those who filed fraudulent mortgage applications from taking advantage of cramdowns.

H.R. 1106 does contain two important provisions to correct flaws in the housing bailout plan passed last year.

Problems with Cramdowns: Allowing bankruptcy judges to modify mortgages would raise mortgage costs for everyone and even more for first time homebuyers. Cramdowns would add additional risk that mortgages will not be repaid as the contract requires. Lenders must charge for that added risk, and experts estimate that the additional costs would raise mortgage rates by as much as two full percentage points or substantially increase required down payments. This increase would apply to every mortgage applicant in order to ensure that the entire pool of mortgages remains profitable upon resale to the secondary market.

Mortgage companies would greatly expand ``risk based pricing'' of individual mortgages as well. These added costs would fall hardest on moderate-income and first-time homebuyers, who have a higher risk of defaulting on a mortgage. This will price many families out of the housing market.

Further undermine the value of mortgage-backed securities: Banks and other investors are already facing heavy losses not only because mortgage-backed securities have lost much of their value but because of uncertainties about whether the mortgages will be paid. The language in H.R. 1106 increases this uncertainty. Investors will be at risk of both foreclosure and cramdowns that reduce the earnings of these securities. Many cramdown mortgages will later go into foreclosure. Since investors have no idea what this new provision will do to the value of their securities, prices will drop further.

Fail to help many homeowners: Only one-third of all Chapter 13 fliers completes the process successfully and gets the fresh start that bankruptcy promises. The other two-thirds ``pay court fees, pay attorney's fees, pay fees to the bankruptcy trustee, invest time and money to restructure their financial affairs, and then wind up with nothing more than temporary relief. In fact, one third of chapter 13 filers go on to file for bankruptcy again.

Other Provisions in H.R. 1102: The Helping Families Save Their Homes Act also contains a mixture of other housing and financial provisions. These include:

Liability waivers for mortgage servicers that modify mortgages: Mortgage servicers receive payments from mortgages and forward them (after fees) to the owners of the mortgages. As the main contact with homeowners, mortgage servicers should be able to refinance or alter mortgages in order to ensure that the owners get the best possible return, but many fear that unhappy mortgage owners would sue them. The legislation provides these servicers with a safe harbor so long as they act within certain specified boundaries. This is a needed change.

Making $250,000 FDIC and MCUA deposit insurance levels permanent: Last fall, Congress increased deposit insurance coverage by FDIC and NCUA to $250,000 until December 2009. This bill makes that change permanent and also increases the agencies' borrowing authority to cover their losses. Borrowing authority is used only if the deposit insurance fund runs out. This is a useful change but unlikely to be needed.

Keeping predatory lenders from taking advantage of FHA programs: Section 203 of H.R. 1106 makes it easier for HUD and the FHA to prevent predatory lenders from underwriting FHA-guaranteed home loans. This is a needed reform.

Trying to fix the Hope for Homeowners program: Last summer, Congress created Hope for Homeowners, an FHA-based program that it originally. FHA claimed the program which is run jointly with Treasury, would help up to 2 million homeowners. To date, according to the FHA, it has actually helped about 500. The legislation makes a number of changes that will make it more attractive to homeowners, raise the cost of it by $2.3 billion, but is unlikely to otherwise improve it.

Making the Problem Worse: Mortgage cramdowns would further destabilize an already damaged housing market while increasing mortgage costs for future borrowers. The useful changes it makes are necessary but in no way overcome the downsides associated with the passage of this legislation.

Analysis of the Homeowner Affordability and Stability Plan

Two of the bill's three key components are designed to provide subsidies and benefits primarily to homeowners who, while still current in their payments, may not be able to take advantage of attractive refinancing opportunities at lower interest rates because the value of their home has declined beyond the loan-to-value ratio permitted by rules governing mortgage investments made by Fannie Mae and Freddie Mac. The second such provision of the plan would provide taxpayer and investor subsidies to mortgage borrowers who have taken on more debt than they could safely manage, including, in some cases, credit card and automobile debt. The third component of the plan encourages the enactment of legislation allowing bankruptcy judges to alter the terms of certain mortgage loans, a practice that to date has been prohibited by federal law.

The legislation suffers from 12 specific weaknesses and risks: The plan's Stability Initiative bestows new and costly benefits on those who took on more debt than they could handle, including credit cards, automobile loans, and mortgages (including refinancing and seconds). Worse, the value of the benefits will vary in direct proportion to the degree of borrower financial irresponsibility and the intensity of community land regulations. Homeowners with a first mortgage as large as $729,750 are eligible for the initiative, meaning that the well-to- do will receive more financial benefits than those of modest means. And as analysts at one nationwide financial firm noted, ``The modifications would go disproportionately to borrowers who overstretched and who lied about their income.'' This moral hazard sends a clear message to the American people: The worse the behavior, the greater the reward.

Under this Stability Initiative, borrowers with a ratio of mortgage debt service to income greater than 31 percent can have their mortgage interest rate reduced to as little as 2 percent if that is what it takes to achieve the 31 percent ratio-with government paying half the subsidy and the investor/lender surrendering the other half. If this concession is insufficient to reach 31 percent. Eligible borrowers may also have loans that are as much as 50 percent greater than the value of the house.

It is also unlikely that, under the Stability Initiative, borrowers with a ratio of debt service payment to income as high as 55 percent-- because of combined mortgage, credit card, and automobile debt--will be eligible to receive temporary payment reductions if they merely agree to HUD-approved counseling. Such borrowers may then be eligible for permanent payment reductions. This reduction scheme will be disclosed in rules that the Administration has announced it will release on March 4.

Because the investor/lenders will be responsible for a portion of the mortgage rate reduction, this program will deter private sector investment in all but the best mortgages. Combined with the proposed ``cramdown'' bankruptcy proposals, the net effect will be to require a substantial and permanent federal presence in the housing finance market to accommodate those many potential borrowers who are not highly qualified.

The plan also includes a formal endorsement by the President of a bankruptcy provision that allows judges to alter the terms of certain mortgages. This provision will increase the risk to lenders of all mortgages. The industry is already treating this as a permanent measure. Increased risk requires higher costs to compensate lenders, and either down payments or interest rates would have to rise, while potential borrowers with checkered credit histories would be denied access to credit. However, these costs would not rise evenly for all borrowers: Higher-risk borrowers (first-time buyers and moderate- income workers) would see costs rise more and have fewer opportunities to buy a house.

Anticipating such criticisms, the proposal contends that it will ``seek careful changes to personal bankruptcy provisions.'' However, because any changes in bankruptcy law must be passed in legislation, this outcome may merely be wishful thinking. As the President wants to make sure that ``millionaire homes don't clog bankruptcy courts,'' mortgages eligible for judicial ``cramdown'' cannot exceed $729,750 in value. Moreover, the most recent version of the legislation weakens language adopted earlier by the House Judiciary Committee to prevent borrowers who committed fraud in their mortgage application from taking advantage of cramdown.

The plan's Refinancing Initiative creates a new right for American borrowers now current in their mortgage payments; the right to refinance their home at a lower interest rate even

if the quality of the loan--as measured by the loan-to-value ratio-- would otherwise pose a risk to the lender. As such, this proposal establishes the act of being highly leveraged or slightly ``underwater'' (the amount that a borrower owes on his or her mortgage is more than the value of the house) as a legitimate reason to default, and as a policy problem worthy of taxpayer support and federal intervention. The creators of this new right fail to recognize that many other consumer credit markets operate comfortably, successfully, and safely despite the fact that many borrowers are underwater the minute they sign the contract--notably home improvements, mobile homes, automobiles, RVs, and HDTV's. Though those borrowers do expect to be ``underwater'' for these kinds of purchases, it raises the question of whether future legislation will extend this concession to car loans and credit card debt, which are also experiencing significant levels of default.

Only borrowers with loans held or repackaged by the federally controlled and subsidized Fannie Mae and Freddie Mac will be eligible to exercise this new right to refinance. Borrowers whose loans are held by private investors are denied this right, further distorting the housing markets with government-selected winners and losers.

To date, the several, federal loan modification programs that have been put in place have had very limited success, and the rate of failures exceeds that of successes, especially for loans where one or more payments have been missed. For loans that were four months past due at time of modification, the recidivism rate is 80 percent after 12 months. For loans one month past due, the recidivism rate after 12 months is 60 percent. With the nationwide decline in house prices accelerating in recent months, the risk of recidivism under the new program could remain at high levels.

The program will cost $275 billion ($75 billion for problem mortgages and $200 billion for Fannie Mae and Freddie Mac).

Obama's plan will take a great deal of time to implement. A recent MarketWatch.com articles notes that loan refinancing applications are up 47 percent at a time when a substantial portion of the loan originating infrastructure has disappeared due to bankruptcy and bank consolidation. The prospect that a shrunken mortgage lending system could expeditiously accommodate the 7-9 million borrowers expected by the Obama plan is wishful thinking. The result will be long waits for refinancing that will come too late for some borrowers and may also crowd out efforts by unsubsidized borrowers to refinance due to the generous financial incentives offered to servicers participating in the new federal program.

Perhaps the most troubling part of the plan is the increased reliance being placed on the now federally controlled Fannie Mae and Freddie Mac, whose tax and corrupt behavior over the past decade was an important contributing factor to the present economic crisis. Although nominally privately owned, both are now run by the U.S. Treasury, whose massive holdings of preferred shares in both give it a huge implicit ownership stake. As is clear from the refinancing plan--which will reduce Fannie's and Freddie's earnings and thus weaken them further-- the two have become little more than the federal government's captive mortgage financing banks to be used at will for any housing policy initiatives that the President and/or Congress wish to pursue. And with the plan's many provisions discouraging the private sector from getting involved in mortgage finance, this plan substantially advances the de facto nationalization of America's housing finance system for all but the ``jumbo'' mortgages that exceed conforming limits.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 190 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to my friend, the gentlewoman from North Carolina (Ms. Foxx). All time yielded during consideration of the rule is for debate only.

General Leave

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and insert extraneous material into the Record.

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

Mr. Speaker, H. Res. 190 provides for consideration of H.R. 1106, the Helping Families Save Their Homes Act of 2009, under a structured rule. While the rule waives clause 10 of rule XXI regarding PAYGO, there is only a technical violation of clause 10 by section 204 of the bill. Because of the timing of cash flows of the Federal Deposit Insurance Corporation, the provision increases direct spending in the first 5- year period, but more than offsets that increase in the 10-year period.

Mr. Speaker, H.R. 1106, the Helping Families Save Their Homes Act of 2009, takes a vital step toward reviving our housing market, stemming the tide of home foreclosures and putting our Nation's economy back on track.

This bill would first give bankruptcy judges the ability to modify, at their own discretion, mortgage loans on a homeowner's principal residence if the homeowner meets specified, stringent criteria. Further, this legislation would also help veterans and other homeowners avoid foreclosure by allowing the Department of Veterans Affairs, the Federal Housing Administration and the Department of Agriculture to guarantee and/or insure mortgage loans modified either out of court or in a bankruptcy case.

This bill would also provide a safe harbor from liability to mortgage servicers who engage in loan modification workouts or other loss mitigation. Many services, Mr. Speaker, have claimed that fear of litigation or uncertainty about what modification actions may be permitted under their agreement have kept them from partaking in loan modifications or other workouts. With the safe harbor provisions in this legislation, they will no longer have any excuse.

Additionally, this bill makes much-needed changes to the HOPE for Homeowners program in order to encourage greater lender participation. It puts the HUD Secretary in charge of running the program, reduces fees and eliminates other administrative burdens, and changes the profit-sharing

provisions to induce more loan writedowns.

Finally, this bill makes permanent the temporary increase in deposit insurance coverage for both the FDIC Deposit Insurance Fund and the National Credit Union Administration Share Insurance Fund. This provision will enhance the liquidity and stability of our banking institutions and help restore confidence in our financial system.

Some have criticized the bankruptcy cramdown provisions in this bill, and I share some of their concerns, claiming that they will cause massive losses to financial institutions, increase the cost of borrowing for other homeowners or lead to a sudden surge of bankruptcy filings. I am not certain that this is the case. Modifications will be at the individual discretion of a bankruptcy judge who will make the determination of whether a borrower has acted responsibly and their claim has any merit.

This provision will maximize, not lessen, the value of troubled mortgages for the lender, and will avoid the decline in property values in neighborhoods where homes have been foreclosed on. It is preposterous to think that individuals would willingly submit themselves to the arduous process, negative stigma and long-lasting effects of filing for bankruptcy. Bankruptcy will remain as it has always been, a last resort.

Under current law, bankruptcy judges already have the authority to modify loans on virtually every secured claim, including vacation homes, investment properties, private jets and luxury yachts, except for primary family residences. This loophole is outdated and in my view absurd, and it must be rectified.

Some may also argue that we are bailing out reckless borrowers at the expense of those who were prudent and responsible. However, many individuals who have duly made every single monthly payment and lived within their means are seeing their home values drop and no longer have the ability to refinance due to the rapidly declining market. Some who are being swept up by the foreclosure crisis are victims of bad lending practices and some who played by the rules and acted responsibly are now finding themselves underwater through no fault of their own.

Throughout this Nation, Mr. Speaker, millions of families are in danger of losing their homes. And while it is easy to think that the foreclosure crisis affects no other than those directly involved, the truth is this crisis has had and will have a rippling effect all across the country. Not only are individuals' livelihoods gravely impacted, but as foreclosures go up, surrounding home prices go down, tax revenue for vital public services falls, financial institutions are saddled with losses, access to credit shrinks and our economy grinds to a halt. This legislation helps put a stop to this deadly spiral.

In my home State of Florida, Mr. Speaker, estimates show just in Florida alone that approximately 160,000 homes can be saved as a result of court supervised modifications. Additionally, a recent report by Credit Suisse estimates that the safe harbor provisions alone will lessen foreclosures by 20 percent.

Just this past Wednesday, President Obama announced his comprehensive homeowners' affordability and stability plan. This legislation is the first step toward putting this plan into action.

Mr. Speaker, I do not pretend that implementing this legislation will prevent every single foreclosure. In fact, there are some cases for which foreclosure is the correct action. However, this bill will help ensure responsible individuals stay in their home and will mitigate the destructive impact of foreclosures on families and communities.

This bill addresses our Nation's foreclosure crisis in a meaningful and responsible fashion by reforming our bankruptcy laws, clearing legal impediments to loan modifications, improving the HOPE for Homeowners program and ensuring confidence in our banking system.

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

Mr. Speaker, I am very pleased to yield 3 minutes to my very good friend from Florida, the gentlewoman, Ms. Castor, an immediate past member of the Rules Committee that left us for greener pastures.

Mr. Speaker, I am very pleased to yield 2 minutes to my good friend, the gentleman from New York, a member of the Judiciary Committee, Mr. Nadler.

Mr. Speaker, my good friend from North Carolina refers to the President's constant statements five or six times during his joint resolution speech of calling for responsibility and accountability, and what she says is that he never pins it on anybody.

My recollection of his speech was he said, ``including me,'' when he was talking about responsibility and accountability. If that's not pinning it on somebody, I don't know what is.

Mr. Speaker. I am very pleased at this time to yield 3 minutes to the distinguished gentlewoman from Ohio, my colleague and former member of the Rules Committee, Ms. Sutton.

Mr. Speaker, may I inquire, please, as to the amount of time remaining on each side?

Mr. Speaker, I am very pleased at this time to yield 2 minutes to the distinguished gentlewoman from Florida, my fellow Floridian and classmate, my good friend, Ms. Brown.

(Ms. CORRINE BROWN of Florida asked and was given permission to revise and extend her remarks.)

If the gentlelady will yield.

I'm not in a position to speak for the Judiciary Committee, but the distinguished Chair of the Judiciary Committee obviously will be one of the conferees, and if such an opportunity exists, then I would urge the gentlelady to speak with he and the Chair of Financial Services.

I think the gentlelady brings up an outstanding point that's true throughout the Nation where people are in need of appropriate legal representation.

Mr. Speaker, I yield an additional 1 minute.

If the gentlelady would yield.

I'd have you to know that this won't be the last vehicle in straightening out financial services.

But you cite to the credit unions correctly. I, too, have had meetings with them. They're very concerned about the cramdown provisions allowing that it may very well cause increases, and they have been extremely responsible in our respective communities.

Mr. Speaker, I am very pleased to yield 2 minutes to the distinguished gentlewoman from California (Ms. Zoe Lofgren), a member of the Judiciary Committee who has worked tirelessly in producing this particular document along with Chairman Conyers and Chairman Frank and other members of their respective committees.

Mr. Speaker, I yield the gentlelady an additional 1 minute.

I do have one more speaker, and I will be prepared to close.

At this time, Mr. Speaker, I am very pleased to yield 2 minutes to my good friend, the gentleman from Rhode Island (Mr. Langevin).

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

This is a good rule for a critically important bill that addresses our current housing market crisis.

My friend from North Carolina speaks of the leadership of this committee being from California and Nevada, the Democratic majority. It is true that Speaker Pelosi is from California and it is true that Senator Harry Reid is from Nevada, but they are two people. There are other people in the leadership in the majority, Senator Durbin from Illinois, Mr. Clyburn from South Carolina, Mr. Larson from Connecticut, the distinguished majority leader, Steny Hoyer, from Maryland.

What we are talking about here is a universal problem insofar as this country is concerned. And I'm just back from an anti-Semitism conference in England, where I read, very actively, regarding their home crisis in the United Kingdom. We are also experiencing a whole global set of circumstances.

Mr. Speaker, in today's Daily Summary, the quote is made from the majority whip's office that Confucius said, ``The strength of a nation is derived from the integrity of its homes.'' I can think--and I'm sure every Member here can think--of all of our families through the years that among the things that they wanted was an opportunity to have a home. When my good friend from North Carolina speaks about returning to welfare, I didn't, when I was a boy, think that it was welfare after the Second World War when the Federal Home Administration, old FHA, and the Veterans Administration built a monument to middle class homes in this country, many of them still standing, many of them giving the foundation, a safe and inhabitable environment for people to raise their children as a result of those particular programs, followed by their successor, the Housing and Urban Development Department. I, as a young lawyer, participated in a variety of methods that gave low and moderate income families an opportunity to have a safe and inhabitable environment under programs such as 221D-3, 221H, a variety of programs rehabilitating properties, building homes for seniors, and giving everybody a chance.

I would like to add an anecdote. The value of my home in my neighborhood in Miramar, Florida, has decreased substantially. Other Members in this body are experiencing the same thing. I have paid my mortgage for 11 years every month on time. If my home value decreases another 6 percent, I will have an upside down or underwater mortgage, having done nothing but the right thing. But there are seven of my neighbors that I know of that are in foreclosure. And fortunately our homeowners association is mindful of the need that we have to work together.

This is a collective thrust, this piece of legislation. This is something to help us all. That's what Americans do. It is not a giveaway. It is not welfare when I look out for my neighbors and they look out for me, it is the potential to lay the foundation for us to get out of a crisis that is in an enormous one for this entire Nation.

Nearly 6 million households in America face foreclosure. My State of Florida has the second highest foreclosure rate after California. It's just plain old common sense for Congress to pass a bill that will help working families who have played by the rules and acted responsibly to stay in their homes and to continue to pay off their mortgages. We can't run away from this crisis. We must rebuild. And we must help those in need.

Neighborhoods in the district that I'm privileged to represent, as well as around this Nation, are struggling, homes are being foreclosed, and we have an opportunity to mitigate the destructive impact of those foreclosures on families and communities. I urge my colleagues to vote in favor of this rule so that we may support a bill that will give millions of Americans the opportunity to stay in their homes and not be forced out on the streets.

In defense of some of the services, in my district, Ocwen Financial Services has been doing loan modifications on their own, and their return rate for foreclosures is substantially less than the norm. There just are some good ones out there. The credit unions and the community banks have been doing responsible lending. They did not take advantage of people who may not have known what they were doing or who should have known and took advantage of the system to buy homes that they should not have bought. It's just that simple.

Mr. Speaker, I urge a ``yes'' vote on the previous question and on the rule. And I beg of us all to understand the critical need that we have to work together in this country, Democrats and Republicans, liberals and conservatives. Everybody in this Nation must face this problem. And, yes, we must act responsibly; and yes, we must act with accountability. And that's what this measure, as authored by the distinguished Chair of the Judiciary Committee and the distinguished Chair of the Financial Services Committee, working in conjunction with their colleagues--I might add in a bipartisan way. There are few people here that have had as many markups as they had in Judiciary and Financial Services. And when they come before the Rules Committee, all I hear of them is the fairness of Congressman Conyers and the fairness of Congressman Frank. So to say that these measures are not bipartisan or that others are not being listened to is just absolutely wrong.

Let us pass this measure.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

Mr. Chairman, I thank the manager for all of her hard work.

I want to pay tribute to Chairman Conyers for standing up in early January and insisting that we complete our tasks, and I always come to the floor to say, this is the little guy's day.

I came earlier today to speak of an individual who had foreclosure issues, but as I proceeded to read her case, she actually went into loan modification with her mortgager, her lender, Countrywide. And isn't it interesting that as her fees were paid and the loan was

supposed to be modified, that some days later, here comes the mortgager with the foreclosure notice or a foreclosure person at her door taking pictures trying to decide what the situation was. Interestingly enough, the house had gone into sale.

These are the unscrupulous types of activities that have come about when there is no binding, if you will, judgment that can come about through the bankruptcy court.

Again, this bill forces no one to pay anything. It takes no money out of the government. All it does is it allows us to treat those fairly who are going into foreclosure.

Mr. Chairman, I rise in strong support of H.R. 1106, ``Helping Families Save Their Homes in Bankruptcy Act of 2009.'' I would like to thank Chairman Conyers of the House Judiciary Committee and Chairman Barney Frank of the Financial Services Committee for their leadership on this issue. I also would like to thank Arthur D. Sidney of my staff who serves as my able Legislative Director.

Mr. Chairman, I urge my colleagues to support this bill because it provides a viable medium for bankruptcy judges to modify the terms of mortgages held by homeowners who have little recourse but to declare bankruptcy.

This bill could not have come at a more timely moment. This bill is on the floor of the House within weeks after the President's address before the Joint Session of Congress where President Obama outlined his economic plan for America and discussed the current economic situation that this country is facing.

To be sure, there are many economic woes that saddle this country. The statistics are staggering.

Home foreclosures are at an all-time high and they will increase as the recession continues. In 2006, there were 1.2 million foreclosures in the United States, representing an increase of 42 percent over the prior year. During 2007 through 2008, mortgage foreclosures were estimated to result in a whopping $400 billion worth of defaults and $100 billion in losses to investors in mortgage securities. This means that one per 62 American households is currently approaching levels not seen since the Depression.

The current economic crisis and the foreclosure blight have affected new home sales and depressed home value generally. New home sales have fallen by about 50 percent. One in six homeowners owes more on a mortgage than the home is worth which raises the possibility of default. Home values have fallen nationwide from an average of 19% from their peak in 2006, and this price plunge has wiped out trillions of dollars in home equity. The tide of foreclosure might become self- perpetuating. The nation could be facing a housing depression-- something far worse than a recession.

Obviously, there are substantial societal and economic costs of home foreclosures that adversely impact American families, their neighborhoods, communities and municipalities. A single foreclosure could impose direct costs on local government agencies totaling more than $34,000.

I am glad that this legislation is finally on the floor of the United States House of Representatives. I have long championed in the first TARP bill that was introduced and signed late last Congress, that language be included to specifically address the issue of mortgage foreclosures. I had asked that $100 billion be set aside to address that issue. Now, my idea has been vindicated as the TARP today has included language and we here today are continuing to engage in the dialogue to provide monies to those in mortgage foreclosure. I have also asked for modification of homeowners' existing loans to avoid mortgage foreclosure. I believe that the rules governing these loans should be relaxed. These are indeed tough economic times that require tough measures.

Because of the pervasive home foreclosures, federal legislation is necessary to curb the fallout from the subprime mortgage crisis. For consumers facing a foreclosure sale who want to retain their homes, Chapter 13 of the Bankruptcy Code provides some modicum of protection. The Supreme Court has held that the exception to a Chapter 13's ability to modify the rights of creditors applies even if the mortgage is under-secured. Thus, if a Chapter 13 debtor owes $300,000 on a mortgage for a home that is worth less than $200,000, he or she must repay the entire amount in order to keep his or her home, even though the maximum that the mortgage would receive upon foreclosure is the home's value, i.e., $200,000, less the costs of foreclosure.

Importantly, H.R. 1106 provides for a relaxation of the bankruptcy provisions and waives the mandatory requirement that a debtor must receive credit counseling prior to the filing for bankruptcy relief, under certain circumstances. The waiver applies in a Chapter 13 case where the debtor submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor's principal residence may commence a foreclosure proceeding against such residence.

This bill also prohibits claims arising from violations of consumer protection laws. Specifically, this bill amends the Bankruptcy Code to disallow a claim that is subject to any remedy for damages or rescission as a result of the claimant's failure to comply with any applicable requirement under the Truth in Lending Act or other applicable state or federal consumer protection law in effect when the noncompliance took place, notwithstanding the prior entry of a foreclosure judgment.

H.R. 1106 also amends the Bankruptcy Code to permit modification of certain mortgages that are secured by the debtor's principal residence in specified respects. Lastly, the bill provides that the debtor, the debtor's property, and property of the bankruptcy estate are not liable for a fee, cost, or charge incurred while the Chapter 13 case is pending and that arises from a debt secured by the debtor's principal residence, unless the holder of the claim complies with certain requirements.

I have long championed the rights of homeowners, especially those facing mortgage foreclosure. I have worked with the Chairman of the House Judiciary Committee to include language that would relax the bankruptcy provisions to allow those facing mortgage foreclosure to restructure their debt to avoid foreclosure.

Manager's Amendment

Because I have long championed the rights of homeowners facing mortgage foreclose in the recent TARP bill and before the Judiciary Committee, I have worked with Chairman Conyers and his staff to add language that would make the bill stronger and that would help more Americans. I co-sponsored sections of the Manager's Amendment and I urge my colleagues to support the bill.

Specifically, I worked with Chairman Conyers to ensure that in section 2 of the amendment, section 109(h) of the Bankruptcy Code would be amended to waive the mandatory requirement, under current law, that a debtor receive credit counseling prior to filing for bankruptcy relief. Under the amended language there is now a waiver that will apply where the debtor submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor's principal residence may commence a foreclosure proceeding against such residence.

This is important because it affords the debtor the maximum relief without having to undergo a slow credit counseling process. This will help prevent the debtor's credit situation from worsening, potentially spiraling out of control, and result in the eventual loss of his or her home.

Section 4 of the Manager's Amendment relaxes certain Bankruptcy requirements under Chapter 13 so that the debtor can modify the terms of the mortgage secured by his or her primary residence. This is an idea that I have long championed in the TARP legislation--the ability of debtors to modify their existing primary mortgages. Section 4 allows for a modification of the mortgage for a period of up to 40 years. Such modification cannot occur if the debtor fails to certify that it contacted the creditor before filing for bankruptcy. In this way, the language in the Manager's Amendment allows for the creditor to demonstrate that it undertook its ``last clear'' chance to work out the restructuring of the debt with its creditor before filing bankruptcy.

Importantly, the Manager's Amendment amends the bankruptcy code to provide that a debtor, the debtor's property, and property of the bankruptcy estate are not liable for fees and costs incurred while the Chapter 13 case is pending and that arises from a claim for debt secured by the debtor's principal residence.

Lastly, I worked to get language in the Manager's Amendment that would allow the debtors and creditors to negotiate before a declaration of bankruptcy is made. I made sure that the bill addresses present situations at the time of enactment where homeowners are in the process of mortgage foreclosure. This is done with a view toward consistency, predictability, and a hope that things will improve.

Rules Committee

During this time, debtors and average homeowners found themselves in the midst of a home mortgage foreclosure crisis of unprecedented levels. Many of the mortgage foreclosures were the result of subprime lending practices.

I have worked with my colleagues to strengthen the housing market and the economy, expand affordable mortgage loan opportunities for families at risk of foreclosure, and strengthen consumer protections against risky loans in the future. Unfortunately, problems in the subprime mortgage markets have helped push the housing market into its worst slump in 16 years.

Before the Rules Committee, I offered an amendment that would prevent homeowners

and debtors, who were facing mortgage foreclosure as a result of the unscrupulous and unchecked lending of predatory lenders and financial institutions, from having their mortgage foreclosure count against them in the determination of their credit score. It is an equitable result given that the debtors ultimately faced mortgage foreclosure because of the bad practices of the lender.

Simply put, my amendment would prevent homeowners who have declared mortgage foreclosure as a result of subprime mortgage lending and mortgages from having the foreclosure count against the debtor/ homeowner in the determination of the debtor/homeowner's credit score.

Specifically, my amendment language was the following: