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

Mr. Chair, Title I of H.R. 1106, the Helping Families Save Their Homes Act of 2009, is based in part on H.R. 200, legislation approved by the Judiciary Committee last month to give families whose home mortgage is in distress a better opportunity to come to terms with their lender on workable payment terms--more realistically based on current market interest rates and current home market values.

Because the provisions in title I of this bill differ in a number of respects from H.R. 200 as reported, and differ further with the adoption of the manager's amendment, I am inserting in the Record a section-by-section analysis of this bill, as a further supplement to the legislative history in the floor debate today and last week, and in the hearings and committee report for H.R. 200.

H.R. 1106, the ``Helping Families Save Their Homes Act of 2009,''

Section-by-Section Explanation (as Amended by the Revised Manager's

Amendment)

Section 1. Short Title; Table of Contents. Subsection (a)

sets forth the short title of this Act as the ``Helping

Families Save Their Homes Act of 2009.'' Subsection (b)

consists of the table of contents.

Title I--Prevention of Mortgage Foreclosures

Subtitle A--Modification of residential mortgages

Section 100. Bankruptcy Code section 101 defines various

terms. Section 100 amends this provision to add a definition

of ``qualified loan modification,'' which is defined as a

loan modification agreement made in accordance with the

guidelines of the Obama Administration's Homeowner

Affordability and Stability Plan, as implemented on March 4,

2009 with respect to a loan secured by a senior security

interest in the debtor's principal residence. To qualify as

such, the agreement must reduce the debtor's mortgage payment

(including principal and interest) and payments for various

other specified expenses (i.e., real estate taxes, hazard

insurance, mortgage insurance premium, homeowners'

association dues, ground rent, and special assessments) to a

percentage of the debtor's income in accordance with such

guidelines. The payment may not include any period of

negative amortization and it must fully amortize the

outstanding mortgage principal. In addition, the agreement

must not require the debtor to pay any fees or charges to

obtain the modification. And, the agreement must permit the

debtor to continue to make these payments notwithstanding the

debtor having filed a bankruptcy case as if he or she had not

filed for such relief.

Section 101. Eligibility for Relief. Bankruptcy Code

section 109(e) sets forth secured and unsecured debt limits

to establish a debtor's eligibility for relief under chapter

13. Section 101 of the Act amends this provision to provide

that the computation of debts does not include the secured or

unsecured portions of debts secured by the debtor's principal

residence, under certain circumstances. The exception applies

if the value of the debtor's principal residence as of the

date of the order for relief under chapter 13 is less than

the applicable maximum amount of the secured debt limit

specified in section 109(e). Alternatively, the exception

applies if the debtor's principal residence was sold in

foreclosure or the debtor surrendered such residence to the

creditor and the value of such residence as of the date of

the order for relief under chapter 13 is less than the

secured debt limit specified in section 109(e). This

amendment is not intended to create personal liability on a

debt if there would not otherwise be personal liability on

such debt.

In addition, section 101 amends Bankruptcy Code section

109(h) to waive the mandatory requirement that a debtor

receive credit counseling prior to 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 (or has commenced) a foreclosure proceeding

against such residence.

Section 102. Prohibiting Claims Arising from Violations of

the Truth in Lending Act. Under the Truth in Lending Act, a

mortgagor has a right of rescission with respect to a

mortgage secured by his or her residence, under certain

circumstances. Bankruptcy Code section 502(b) enumerates

various claims of creditors that are not entitled to payment

in a bankruptcy case, subject to certain exceptions. Section

102 amends Bankruptcy Code section 502(b) to provide that a

claim for a loan secured by a security interest in the

debtor's principal residence is not entitled to payment in a

bankruptcy case to the extent that such claim is subject to a

remedy for rescission under the Truth in Lending Act,

notwithstanding the prior entry of a foreclosure judgment. In

addition, section 102 specifies that nothing in this

provision may be construed to modify, impair, or supersede

any other right of the debtor.

Section 103. Authority to Modify Certain Mortgages. Under

Bankruptcy Code section 1322(b)(2), a chapter 13 plan may not

modify the terms of a mortgage secured solely by real

property that is the debtor's principal residence. Section

103 amends Bankruptcy Code section 1322(b) to create a

limited exception to this prohibition. The exception only

applies to a mortgage that: (1) originated before the

effective date of this provision; and (2) is the subject of a

notice that a foreclosure may be (or has been) commenced with

respect to such mortgage.

In addition, the debtor must certify pursuant to new

section 1322(h) that he or she contacted--not less than 30

days before filing for bankruptcy relief--the mortgagee (or

the entity collecting payments on behalf of such mortgagee)

regarding modification of the mortgage. The debtor must also

certify that he or she provided the mortgagee (or the entity

collecting payments on behalf of such mortgagee) a written

statement of the debtor's current income, expenses, and debt

in a format that substantially conforms with the schedules

required under Bankruptcy Code section 521 or with such other

form as promulgated by the Judicial Conference of the United

States. Further, the certification must include a statement

that the debtor considered any qualified loan modification

offered to the debtor by the mortgagee (or the entity

collecting payments on behalf of such holder). This

requirement does not apply if the foreclosure sale is

scheduled to occur within 30 days of the date on which the

debtor files for bankruptcy relief. If the chapter 13 case is

pending at the time new section 1322(h) becomes effective,

then the

debtor must certify that he or she attempted to contact the

mortgagee (or the entity collecting payments on behalf of

such mortgagee) regarding modification of the mortgage before

either: (1) filing a plan under Bankruptcy Code section 1321

that contains a modification pursuant to new section

1322(b)(11); or (2) modifying a plan under Bankruptcy Code

section 1323 or section 1329 to contain a modification

pursuant to new section 1322(b)(11).

Under new section 1322(b)(11), the debtor may propose a

plan modifying the rights of the mortgagee (and the rights of

the holder of any claim secured by a subordinate security

interest in such residence) in several respects. It is

important to note that the intent of new section

1322(b)(11) is permissive. Accordingly, a chapter 13 may

propose a plan that proposes any or all types of

modification authorized under section 1322(b)(11).

First, the plan may provide for payment of the amount of

the allowed secured claim as determined under section

506(a)(1). In making such determination, the court, pursuant

to new section 1322(i), must use the fair market value of the

property as of when the value is determined. If the issue of

value is contested, the court must determine such value in

accordance with the appraisal rules used by the Federal

Housing Administration.

Second, the plan may prohibit, reduce, or delay any

adjustable interest rate applicable on and after the date of

the filing of the plan.

Third, it may extend the repayment period of the mortgage

for a period that is not longer than the longer of 40 years

(reduced by the period for which the mortgage has been

outstanding) or the remaining term of the mortgage beginning

on the date of the order for relief under chapter 13.

Fourth, the plan may provide for the payment of interest at

a fixed annual rate equal to the currently applicable average

prime offer rate as of the date of the order for relief under

chapter 13, as determined pursuant to certain specified

criteria. The rate must correspond to the repayment term

determined under new section 1322(b)(11)(C)(i) as published

by the Federal Financial Institutions Examination Council in

its table entitled, ``Average Prime Offer Rates--Fixed.'' In

addition, the rate must include a reasonable premium for

risk.

Fifth, the plan, pursuant to new section 1322(b)(11)(D),

may provide for payments of such modified mortgage directly

to the holder of the claim or, at the discretion of the

court, through the chapter 13 trustee during the term of the

plan. The reference in new section 1322(b)(11)(D) to ``holder

of the claim'' is intended to include a servicer of such

mortgage for such holder. It is anticipated that the court,

in exercising its discretion with respect to allowing the

debtor to make payments directly to the mortgagee or by

requiring payments to be made through the chapter 13 trustee,

will take into consideration the debtor's ability to pay the

trustee's fees on payments disbursed through the trustee.

New section 1322(g) provides that a claim may be reduced

under new section 1322(b)(11)(A) only on the condition that

the debtor agrees to pay the mortgagee a stated portion of

the net proceeds of sale should the home be sold before the

completion of all payments under the chapter 13 plan or

before the debtor receives a discharge under section 1328(b).

The debtor must pay these proceeds to the mortgagee within 15

days of when the debtor receives the net sales proceeds. If

the residence is sold in the first year following the

effective date of the chapter 13 plan, the mortgagee is to

receive 90 percent of the difference between the sales price

and the amount of the claim as originally determined under

section 1322(b)(11) (plus costs of sale and improvements),

but not to exceed the unpaid amount of the allowed secured

claim determined as if such claim had not been reduced under

new section 1322(b)(11)(A). If the residence is sold in

the second year following the effective date of the

chapter 13 plan, then the applicable percentage is 70

percent. If the residence is sold in the third year

following the effective date of the chapter 13 plan, then

the applicable percentage is 50 percent. If the residence

is sold in the fourth year following the effective date of

the chapter 13 plan, then the applicable percentage is 30

percent. If the residence is sold in the fifth year

following the effective date of the chapter 13 plan, then

the applicable percentage is ten percent. It is the intent

of this provision that if the unsecured portion of the

mortgagee's claim is partially paid under this provision

it should be reconsidered under 502(j) and reduced

accordingly.

Section 104. Combating Excessive Fees. Section 104 amends

Bankruptcy Code section 1322(c) to provide that the debtor,

the debtor's property, and property of the bankruptcy estate

are not liable for a fee, cost, or charge that is incurred

while the chapter 13 case is pending and that arises from a

claim for debt secured by the debtor's principal residence,

unless the holder of the claim complies with certain

requirements. It is the intent of this provision that its

reference to a fee, cost, or charge includes an increase in

any applicable rate of interest for such claim. It also

applies to a change in escrow account payments.

To ensure such fee, cost, or charge is allowed, the

claimant must comply with certain requirements. First, the

claimant must file with the court and serve on the chapter 13

trustee, the debtor, and the debtor's attorney an annual

notice of such fee, cost, or charge (or on a more frequent

basis as the court determines) before the earlier of one year

of when such fee, cost, or charge was incurred or 60 days

before the case is closed.

Second, the fee, cost, or charge must be lawful under

applicable nonbankruptcy law, reasonable, and provided for in

the applicable security agreement.

Third, the value of the debtor's principal residence must

be greater than the amount of such claim, including such fee,

cost or charge.

If the holder fails to give the required notice, such

failure is deemed to be a waiver of any claim for such fees,

costs, or charges for all purposes. Any attempt to collect

such fees, costs, or charges constitutes a violation of the

Bankruptcy Code's discharge injunction under section

524(a)(2) and the automatic stay under section 362(a),

whichever is applicable.

Section 104 further provides that a chapter 13 plan may

waive any prepayment penalty on a claim secured by the

debtor's principal residence.

Section 105. Confirmation of Plan. Bankruptcy Code section

1325 sets forth the criteria for confirmation of a chapter 13

plan. Section 105 amends section 1325(a)(5) (which specifies

the mandatory treatment that an allowed secured claim

provided for under the plan must receive) to provide an

exception for a claim modified under new section 1322(b)(11).

The amendment also clarifies that payments under a plan that

includes a modification of a claim under new section

1322(b)(11) must be in equal monthly amounts pursuant to

section 1325(a)(5)(B)(iii)(I).

In addition, section 105 specifies certain protections for

a creditor whose rights are modified under new section

1322(b)(11). As a condition of confirmation, new section

1325(a)(10) requires a plan to provide that the creditor must

retain its lien until the later of when: (1) the holder's

allowed secured claim (as modified) is paid; (2) the debtor

completes all payments under the chapter 13 plan; or (3) if

applicable, the debtor receives a discharge under section

1328(b).

Section 105 also provides standards for confirming a

chapter 13 plan that modifies a claim pursuant to new section

1322(b)(11). First, the debtor cannot have been convicted of

obtaining by actual fraud the extension, renewal, or

refinancing of credit that gives rise to such modified claim.

Second, the modification must be in good faith. Lack of good

faith exists if the debtor has no need for relief under this

provision because the debtor can pay all of his or her debts

and any future payment increases on such debts without

difficulty for the foreseeable future, including the positive

amortization of mortgage debt. In determining whether a

modification under section 1322(b)(11) that reduces the

principal amount of the loan is made in good faith, the court

must consider whether the holder of the claim (or the entity

collecting payments on behalf of such holder) has offered the

debtor a qualified loan modification that would enable the

debtor to pay such debts and such loan without reducing the

principal amount of the mortgage.

Section 105 further amends section 1325 to add a new

provision. New section 1325(d) authorizes the court, on

request of the debtor or the mortgage holder, to confirm a

plan proposing to reduce the interest rate lower than that

specified in new section 1322(b)(11)(C)(ii), provided: (1)

the modification does not reduce the mortgage principal; (2)

the total mortgage payment is reduced through interest rate

reduction to the percentage of the debtor's income that is

the standard for a modification in accordance with the Obama

Administration's Homeowner Affordability and Stability Plan,

as implemented on March 4, 2009; (3) the court determines

that the debtor can afford such modification in light of the

debtor's financial situation, after allowance of expense

amounts that would be permitted for a debtor subject to

section 1325(b)(3), regardless of whether the debtor is

otherwise subject to such paragraph, and taking into account

additional debts and fees that are to be paid in chapter 13

and thereafter; and (4) the debtor is able to prevent

foreclosure and pay a fully amortizing 30-year loan at such

reduced interest rate without such reduction in principal. If

the mortgage holder accepts a debtor's proposed modification

under this provision, the plan's treatment is deemed to

satisfy the requirements of section 1325(a)(5)(A) and the

proposal should not be rejected by the court.

Section 106. Discharge. Bankruptcy Code section 1328 sets

forth the requirements by which a chapter 13 debtor may

obtain a discharge and the scope of such discharge. Section

106 amends section 1328(a) to clarify that the unpaid portion

of an allowed secured claim modified under new section

1322(b)(11) is not discharged. This provision is not intended

to create a claim for a deficiency where such a claim would

not otherwise exist.

Section 107. Standing Trustee Fees. Section 108(a) amends 28 U.S.C. Sec. 586(e)(1)(B)(i) to provide that a chapter 13 trustee may receive a commission set by the Attorney General of no more than four percent on payments made under a chapter 13 plan and disbursed by the chapter 13 trustee to a creditor whose claim was modified under Bankruptcy Code section 1322(b)(11), unless the bankruptcy court waives such fees based on a determination that the debtor has income less

than 150 percent of the official poverty line applicable to the size of the debtor's family and payment of such fees would render the debtor's plan infeasible.

With respect to districts not under the United States trustee system, section 108(b) makes a conforming revision to section 302(d)(3) of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986.

Section 108. Effective Date; Application of Amendments. Section 108(a) provides that this measure and the amendments made by it, except as provided in subsection (b), take effect on the Act's date of enactment.

Section 108(b)(1) provides, except as provided in paragraph (2), that the amendments made by this measure apply to cases commenced under title 11 of the United States Code before, on, or after the Act's date of enactment.

Section 108(b)(2) specifies that paragraph (1) does not apply with respect to cases that are closed under the Bankruptcy Code as of the date of the enactment of this Act.

Section 109. GAO Study. Section 109 requires the Government Accountability Office to complete a study and to submit a report to the House and Senate Judiciary Committees within two years from the enactment of this Act a report. The report must contain the results of the study of: (1) the number of debtors who filed cases under chapter 13, during the one-year period beginning on the date of the enactment of this Act for the purpose of restructuring their principal residence mortgages; (2) the number of mortgages restructured under this Act that subsequently resulted in default and foreclosure; (3) a comparison between the effectiveness of mortgages restructured under programs outside of bankruptcy, such as Hope Now and Hope for Homeowners, and mortgages restructured under this Act; (4) the number of appeals in cases where mortgages were restructured under this Act; (5) the number of such appeals where the bankruptcy court's decision was overturned; and (6) the number of bankruptcy judges disciplined as a result of actions taken to restructure mortgages under this Act. In addition, the report must include a recommendation as to whether such amendments should be amended to include a sunset clause.

Section 110. Report to Congress. Not later than 18 months after the date of enactment of this Act, the Government Accountability Office, in consultation with the Federal Housing Administration, must submit to Congress a report containing: (1) a comprehensive review of the effects of the Act's amendments on bankruptcy courts; (2) a survey of whether the types of homeowners eligible for the program should be limited; and (3) a recommendation on whether such amendments should remain in

effect.

Title III--Mortgage Fraud

Section 301. Short Title. Section 301 sets forth the short

title of title III as the Nationwide Mortgage Fraud Task

Force Act of 2009.

Section 302. Nationwide Mortgage Fraud Task Force.

Subsection (a) establishes a nationwide mortgage fraud task

force within the Justice Department to address mortgage fraud

in the United States. Subsection (b) mandates that the

Attorney General must provide the task force with appropriate

staff, administrative support, and other resources necessary

so that the task force can carry out its duties. Subsection

(c) requires the Attorney General to appoint one staff member

to be the executive director of the task force who, in turn,

will ensure that the task force carries out its duties.

Subsection (d) requires the task force to establish, oversee,

and direct branches in each of the ten states determined by

the Attorney General to have the highest concentration of

mortgage fraud. Subsection (e) requires the task force to

coordinate with federal, state and local law enforcement to

establish mortgage fraud initiatives; provide training; and

collect and disseminate data. Subsection (f), among other

matters, authorizes the task force to establish a toll-free

hotline for reporting mortgage fraud; provide the public with

access to information and resources with respect to mortgage

fraud; establish a data base; and make legislative proposals.

Subsection (g), for purposes of this provision, defines

mortgage fraud as a material misstatement, misrepresentation

or omission relating to the property or potential mortgage

relied on by an underwriter or lender to fund, purchase, or

insure a loan.

Title IV--Foreclosure Moratorium Provisions

Section 401. Sense of the Congress on Foreclosures.

Subsection (a) expresses a sense of the Congress that

mortgage holders, institutions, and mortgage servicers should

not initiate a foreclosure proceeding or sale until the

foreclosure mitigation provisions, such as Hope for

Homeowners Program and the President's Homeowner

Affordability and Stability Plan, have been implemented and

determined to be operational by the Secretary of the Treasury

and the Secretary of Housing and Urban Development.

Subsection (b) states that the foreclosure moratorium should

apply only for first mortgages secured by the owner's

principal dwelling. Subsection (c) provides that if a

mortgage holder, institution, or mortgage servicer (to which

subsection (a) applies) reaches a loan modification agreement

with a homeowner under the auspices of the Federal Housing

Administration before any plan referred to in such subsection

takes effect, subsection (a) shall cease to apply to such

institution as of the effective date of the loan modification

agreement. Subsection (d) states that any homeowner for whose

benefit any foreclosure proceeding or sale is barred under

subsection (a) from being instituted, continued or

consummated with respect to any homeowner mortgage should not

destroy, damage, or impair such property, allow it to

deteriorate, or commit waste on the property. Subsection (e)

provides that any homeowner for whose benefit any foreclosure

proceeding is barred under subsection (a) from being

instituted, continued, or consummated with respect to any

homeowner mortgage should respond to reasonable inquiries

from a creditor or servicer during the period during which

such foreclosure proceeding or sale is barred.

Mr. Chairman, at this time, I am pleased to yield 1 minute to the gentlewoman from Minnesota (Mrs. Bachmann).

Mr. Chairman, I yield myself 3 minutes.

First, I'd like to respond to the gentleman from Vermont who said that Citigroup endorsed this legislation. Well, I must tell you the American Banking Association doesn't support this, nor do the community bankers, the bankers who still have their heads above water all across my congressional district and many other districts across the country that are making mortgage loans day in and day out. They don't support this legislation. But a bank that is receiving already tens of billions of dollars in government assistance supports it. That should convince us that this legislation leads us in the right direction?

Then to the gentleman from Georgia, I would point out that the Congress, a number of years ago, created a special Chapter 12 bankruptcy proceeding for farmers, and that was a temporary change in the law as well, as this one is. The gentleman is correct; it only applies to existing mortgages. But that law, created many, many years ago, still exists because it's been extended and extended, and we are at risk of having the same thing happen here, particularly when the mindset is that we should turn to the advice of banks that are failing to tell us a good way to handle a problem that banks that are succeeding say it is a bad, bad practice.

And I also want to speak against this amendment. Far from making bankruptcy a last resort, this gives homeowners two bites at the apple. Even if they obtain the Obama compliant loan modification from their lenders, i.e., workouts that meet the terms of President Obama's mortgage program, they can still go into bankruptcy. Once there, they can shop for a better deal from the bankruptcy court. Lenders, meanwhile, have to honor the already-cut voluntary deals all the way through bankruptcy.

At the end of the case, the homeowner keeps whichever deal is sweeter. That's not making bankruptcy a last resort. That's guaranteeing abuse of both voluntary modification and bankruptcy. We're going to see a run on the bankruptcy courts if this legislation is adopted.

Meanwhile, what happens to the borrower who rejects an offer meeting President Obama's terms? Nothing. The bankruptcy court can theoretically refuse to confirm a borrower's cramdown plan, but under the terms of the amendment, that will likely happen only when the lender offered a modification without a voluntary cramdown and the borrower has no need for bankruptcy relief anyway.

And what about borrowers who are within 30 days of foreclosure sales? They don't even have to contact their lenders about voluntary modifications. So none of the amendment modifications do not apply.

The new manager's amendment does nothing to change this exception that

swallows the whole bill. As a result, borrowers who may have entered into mortgages that they shouldn't have in the first place, and bankruptcy attorneys can game the system by simply waiting until borrowers are within the 30 days of a foreclosure sale to file for bankruptcy.

I reserve the balance of my time.

Mr. Chairman, I yield myself 30 seconds.

First, I say to the gentlewoman from California that the largest credit union association in the world, Credit Union National Association, a member-owned collection of credit unions around the United States, strongly opposes this legislation. When we talk about the ``little people'' and the organizations that reach out and help people day-to-day with loans, they know the impact that this will have.

And secondly, to the gentleman from North Carolina, the fact of the matter is cramdowns were entirely prohibited going back to the 1898 law. So for more than 100 years, when they liberalized in other areas, they simply continued in this area. It's not true that they have only prohibited cramdowns since 1978.

Mr. Chairman, I yield 2 minutes to the gentleman from Iowa (Mr. King).

Mr. Chairman, at this time I am pleased to yield 1\1/ 2\ minutes to the gentleman from Georgia (Mr. Price).

Mr. Chairman, I yield myself 1 minute.

Some of the other issues raised in this manager's amendment that need to be pointed out are that the amendment provides an alternative to cramdown of principal, but astoundingly the alternative is free money. If the judge does not want to give a cramdown, he can just rewrite the mortgage as a no-interest loan over the full term of a new 30-year deal. Now, just like there's no such thing as a free lunch, there's no such thing as free money for banks or credit unions to lend to the people who come to them.

So while the gentleman--in fact, several have made the point that this only applies to existing mortgages. The fact of the matter is the money to pay for the modifications that are made here has got to come from someplace. And while I remain concerned that all you would have to do in the future would be to advance the enactment date--everything else in the law would be the same--so you could continue this policy and make it permanent, even if you didn't, money from future borrowers is what's going to be used to fund these changes in current mortgages. It's wrong.

Mr. Chairman, I yield myself the remaining time.

Mr. Chairman, the bottom line, in response to the gentleman from Georgia's argument, is that his case is the strongest one for leaving the bankruptcy laws the way they are because the incentives already exist for them to avoid the cost that he described. So somebody who is struggling right now with their mortgage payments, the incentive exists for them to work with the financial institution and for the financial institution to work with them so they don't face the uncertainties that occur in bankruptcy court.

So, the bottom line is that what this is going to do is it's going to pass along to future people who want to buy homes, whether the law is extended in the future or not, the cost that will be borne by credit unions and community banks and others who are making these mortgages today--they have to cover costs that are unanticipated when they made the mortgages--they're going to have to pass them along in the future. To the extent that they can voluntarily work that out with the existing homeowner, that is the best solution. But that occurs right now and that incentive exists right now under the law. To change the law in the manner that's provided for here, even with the changes in this amendment, simply does not work. And it does not give the assurance to those who said that there needs to be a second chance, a second opportunity to negotiate between the lender and the homeowner voluntarily

because, as I pointed out earlier, any clever bankruptcy attorney will advise his client to simply wait until they're within 30 days of foreclosure, then they don't have to engage in that, they can go straight to the bankruptcy court, bypass exactly what he was calling for happening, and go to the court and see what they can accomplish there under this very, very harmful law from the standpoint of the health of currently healthy banking institutions.

So I urge my colleagues to oppose this amendment and to oppose the underlying bill. This is not the way to keep a healthy system by allowing people to continue to borrow and buy homes.

Mr. Chairman, I demand a recorded vote.

I thank the gentleman for yielding me the time, and I am pleased to support his amendment, which addresses a serious problem that's in the underlying bill that is not corrected by the manager's amendment, and that is that the cramdown bill will reduce the incentive for many solvent borrowers to keep making payments on their mortgages.

While there are 3 million borrowers who are 60 days or more delinquent on their mortgages, 52 million borrowers remain current in their payments. The cramdown bill gives struggling, but still solvent, borrowers a powerful incentive to stop paying off their mortgages, trigger foreclosure notices and go into bankruptcy to cramdown their mortgage principal and restructure or eliminate all of their other debts.

We will have an outright catastrophe on our hands if most borrowers get the idea that they can successfully game the bankruptcy system in this way. The gentleman's amendment would correct this problem and make sure that we don't have a run on the bankruptcy courts of great magnitude by creating what is currently in the bill now, an incentive to file bankruptcy if the value of your mortgage is greater than the value of your home.

The Four Worst Things About the Mortgage Cramdown Bill (H.R. 200)

No. 1: Back to the Financial Meltdown--The cramdown bill

seriously threatens to send us through a time warp straight

back to the September financial meltdown. Write-downs of

mortgages in bankruptcy will inexorably force downgrades of

mortgage-backed securities based on those mortgages. The

downgrades will in turn force banks and insurance companies

on the hook for the securities to boost their capital

reserves. (For example, if a AAA-rated security is downgraded

to a BB rating, a bank or insurance company will have to hold

10-times the capital reserves.) The resulting hoarding of

capital could total hundreds of billions of dollars, freeze

lending, kill many already wounded banks, and send us

straight back to the brink we faced in September 2008. This

could precipitate another bank bailout to the tune of

hundreds of billions of dollars, and it will undermine

everything we yet have done to stem the financial crisis.

No. 2: Moral Hazard--The cramdown bill will reduce the

incentive for many solvent borrowers to keep making payments

on their mortgages. While 3 million borrowers are 60 days or

more delinquent on their mortgages, 52 million borrowers

remain current in their payments. The cramdown bill gives

struggling but still solvent borrowers a powerful incentive

to stop paying off their mortgages, trigger foreclosure

notices, and go into bankruptcy to cram down their mortgage

principal and restructure or eliminate all of their other

debts. We will have an outright catastrophe on our hands if

most borrowers get the idea that they can successfully game

the bankruptcy system in this way.

No. 3: Higher Interest Rates and Down Payment

Requirements--Including for the Innocent and the Risky

Borrowers Most in Need--The cramdown bill is not the last

step. It is the key step in the Democratic Congress' walk-up

to its long-sought repeal of the primary residence mortgage

exception from the Bankruptcy Code. Once the primary

residence exception is gone, lenders' greatly increased risk

will surely lead to higher interest rates, higher down

payment requirements, and other, tighter terms of principal

residence mortgages. This will especially hurt already risky,

lower-income borrowers, anyone who needs to refinance out of

a challenging mortgage, and everyone who responsibly waited

on the home-buying sidelines until the housing bubble burst.

In fact, once the first, very big step is taken through the

cramdown bill, lenders would be foolish not to begin pricing

in their likely increased risk right away. So what's the

result of the cramdown bill? Nothing more than swapping the

victims.

No. 4: We Still Have Better Options We Can Try--Backers of

the cramdown bill say we've tried everything else to stem the

foreclosure crisis, and nothing else has worked. That's

nonsense. The most recent voluntary programs are working

better, and top-flight academics have proposed a terrific

solution to get at the mortgages we still haven't been able

to reach--mortgages served by third-party servicers that

don't own the loans. These servicers lack sufficient

incentive to seek loan modifications rather than to

foreclose. What is more, if they do modify loans, they can be

sued by mortgage-backed securities investors. Still on the

table is a proposal to fix this problem by giving third-party

servicers a small, per-loan incentive out of TARP funds, and

cutting off litigation risk by overriding problem contract

clauses and affording a litigation safe-harbor. This proposal

appears to be the best possible solution for the critical

mass of the remaining problem loans. It will cost little more

than $10 billion in TARP funds. Why on earth would we risk

the parade of horribles and hundreds of billions of dollars

of downside risk threatened by the cramdown bill, when we

still haven't tried other, better options.

Mr. Chairman, I rise to claim the time in opposition to the amendment, even though I am not opposed to the amendment.

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

The amendment seeks partially to reinstate a credit counseling requirement for chapter 13 bankruptcy petitioners that H.R. 1106 will strip entirely away. There is no good reason to wipe out the credit counseling requirement for debtors facing foreclosure.

Bankruptcy credit counseling benefits consumers by providing the financial education needed to emerge successfully from bankruptcy. Homeowners facing foreclosure are ideal candidates for credit counseling. This is not always because they can avoid bankruptcy.

It is often so that they can get help to increase their prospects of being successful after bankruptcy. The vast majority of Americans who receive credit counseling believe strongly that it benefits them.

Finally, credit counseling offers one last real opportunity for a homeowner to reach out to a lender and determine whether a loan modification is possible. A majority claims that many borrowers were hoodwinked into obtaining their loans. That's largely why the majority wants homeowners to be able to take their loans into bankruptcy.

But if credit counseling might show homeowners a better option than bankruptcy, why not let them try counseling. The amendment we are considering does not go far enough. It does not fully restore the requirement for counseling that is in current law.

The Rules Committee should have made Mr. Forbes' credit counseling amendment in order. That amendment would fully restore the counseling requirement and ensure that borrowers receive counseling before they file for bankruptcy.

However, because the amendment before us does restore at least a limited requirement for counseling, I support it.

I reserve the balance of my time.

Mr. Chairman, may I ask how much time is remaining on each side?

Mr. Chairman, I yield such time as he may consume to the gentleman from Texas (Mr. Gohmert).

Mr. Chairman, may I ask how much time is remaining?

Mr. Chairman, let me take the 30 seconds to say that while I think this is a good amendment and I support it, it doesn't go as far as it should have. We should have had the opportunity to vote today and debate today the amendment offered by Congressman Forbes from Virginia. But nonetheless, that not being the case, I support this amendment.

But I still strongly oppose this underlying legislation, which is going to cause hardships for future homeowners who are going to wind up paying higher mortgage rates and larger down payments for the problems that exist today. That's wrong. We should not pass that and spread that risk to those people, and we should not jeopardize legitimate credit unions and community banks that have been doing so much to help extend credit in this country.

I have this amendment at the desk.

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

(Ms. ZOE LOFGREN of California asked and was given permission to revise and extend her remarks.)

Mr. Chairman, this important bill gives families whose home mortgages are in distress a better opportunity to come to terms with their lender, to bring their mortgage payments in line with prevailing lending rates in the lending market and with prevailing values in the housing market. This is the same opportunity that owners of vacation homes, investment properties, private jets, and luxury yachts have long enjoyed. I think it's only fair that we offer it now to average families as well. The economic crisis engulfing this country and the world had its start in the housing foreclosure crisis. The Helping Families Save Their Homes Act will begin to address this underlying cause, and it will provide meaningful relief to struggling homeowners.

In developing this legislation, we have benefited at every step of the way from constructive engagement from members on and off the Judiciary Committee, from lenders and brokers, from consumer groups, from bankruptcy judges and trustees. With their help, we've reached consensus on a series of significant changes culminating in the manager's amendment before us today. I should note that the amendment is the Lofgren-Tauscher-Cardoza amendment, and the changes that it encompasses make this a much better bill.

Under the manager's amendment, the homeowner must notify the lender, submit financial records and work in good faith for at least 30 days to try to modify a mortgage outside of the bankruptcy using the Obama mortgage modification plan outlined yesterday. We provide also that, should those efforts not prove fruitful and as a last resort an individual ends up in Chapter 13 proceedings, the court should utilize the Obama mortgage modification plan as a guideline for the court in reviewing and in helping a homeowner to meet obligations.

We also have required that bankruptcy courts will use the FHA appraisal guidelines, repayment plans, and for equal monthly mortgage payments. If a homeowner sells a home while still under a Chapter 13 payment plan, the lender is going to share in the profit, and that's only fair. The closer in time of the mortgage modification, the greater the lender's share, and the manager's amendment actually further increases the lender's share at each point over the period.

Homeowners who engage in bad faith, such as filing for bankruptcy when they could really afford to pay their mortgages, will be disqualified for assistance in chapter 13, and a special Justice Department task force is set up to investigate reports of possible mortgage fraud. These are in addition to improvements already made at earlier stages. The changes are all described in greater detail in a summary that was sent to all of your offices today. I have brought copies of a summary with me today.

In short, we have sought to respond in a reasonable manner to every single concern brought to our attention. We've achieved a balanced reform that will bring meaningful help to families in genuine need without costing taxpayers a dime.

The bill is not going to usher in a rash of bankruptcy filings. In fact, by setting up a homeowner-lender negotiating process that begins well before bankruptcy, it is designed to keep more families out of bankruptcy and out of foreclosure. The number of new chapter 13 mortgage modifications that may result will be far less than the number of foreclosures that will be prevented, and preventing foreclosures is the key. That will benefit not only homeowners and their families but also neighborhoods, their communities, their lenders, and the entire American economy.

It's worth noting that any time there is a foreclosure, the average decline of property values for neighboring property is 9 percent, so this is important to every American to avert these foreclosures.

I thank Mrs. Tauscher, Mr. Cardoza, Mr. Marshall, Brad Miller, John Conyers, and all of the other Members who have worked so hard to improve this bill through the manager's amendment.

I reserve the balance of my time.

Mr. Chairman, I would now like to yield 1 minute to the gentleman from Vermont (Mr. Welch).

I would just note that yesterday was the anniversary of our Constitution's going into effect, March 4, 1789. In that Constitution was article I, section 8 that provides for bankruptcy.

I would yield 40 seconds to Mr. Marshall.

Mr. Chairman, I would further yield 1 minute to a member of the committee, Ms. Sheila Jackson-Lee of Texas.

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Chairman, I would just note that the National Association of Community Development Credit Unions has announced their support of this measure as altered.

I yield 2 minutes to the gentleman from North Carolina (Mr. Miller), who's worked so hard on this measure, who was the author of the underlying bill in the last Congress.

Mr. Chairman, I would yield the gentleman an additional 15 seconds.

Mr. Chairman, may I inquire as to the time remaining on each side?

Mr. Chairman, I yield to the gentleman from Florida (Mr. Meek) 1 minute.

Mr. Chairman, I would like to yield 15 seconds to Mr. Marshall.

Mr. Chairman, I yield 1 minute to a member of the committee, Mr. Maffei.

Let me mention one point that has been discussed, which is the potential that enacting this legislation would somehow impact future interest rates for principal mortgages.

I would like to mention that Mark Zandi, who was Senator John McCain's economic adviser during his campaign for President, said this: ``Given that the total cost of foreclosure to lenders is much greater than that associated with Chapter 13 bankruptcy, there is no reason to believe that the cost of mortgage credit across all mortgage loan products should rise.''

I think that this is a bogus argument. And I think that if we don't act to provide fairness to this system, we will be letting down our constituents, and once again, the little guy will lose.

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

Mr. Chairman, may I inquire as to how much time remains on each side.

I would like to yield 1 minute to the gentleman from Georgia (Mr. Marshall) at this point.

Mr. Chairman, I yield 30 seconds to the gentleman from Georgia, who, I would like to point out, was actually, in his prior life before Congress, an expert in this area of the law.

Mr. Chairman, I yield myself the remaining time.

Nearly six million households are facing the possibility of foreclosure in our country. And as a result, responsible families who did everything right, who have a traditional mortgage, are facing foreclosure or their neighborhoods are struggling. It's estimated that each foreclosed home reduces the price of the surrounding property-- people who did nothing wrong--by 9 percent, or sometimes more. That's when the meth dealers move that is the ``sometimes more.''

This bill takes a number of steps. We've talked about bankruptcy, but that's just a small part of it. It provides a safe harbor for servicers to modify loans. It increases the FDIC insured rate for banks. It makes improvements to the HOPE for Homeowners Program. But it also narrowly affects the exemption for primary residences under Chapter 13.

As has been pointed out, speculators can go into Chapter 13 and get complete relief; it's only the individual homeowner who is not able to get that relief. That's just not fair. There's no way you can possibly defend how that is fair, that the big guys and the speculators get their way, but the individual struggling homeowner does not.

We have worked very hard in these last few weeks to narrow this provision, to listen to every objection that was honestly made, that was credible, and to accommodate it. This amendment is a consensus measure that makes the bill better. I urge its passage.

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

Mr. Chairman, I must oppose this amendment, and I yield myself such time as I may consume.

The issue it addresses is already addressed in the bill and, again, in the manager's amendment. This would take the issue another step further, and I will say it's a step too far.

This would have the effect of making it practically impossible for a family to move to pursue another job. Families would not only keep their homes, they would be trapped there.

The bill also leaves no room for a homeowner to reap a windfall, either calculated or happenstance, so this amendment is unrequired.

I would note that the Price amendment would turn homeowners really into renters for life. It would remove any incentive for a homeowner who needed to sell a house to seek top value in the sale of that house or even to keep up appearances on that house.

It's a mistake, and it's not what the American Dream is all about.

I reserve the balance of my time.

I would yield to the gentleman from Georgia (Mr. Marshall) 1 minute.

I would yield the gentleman an additional 15 seconds.

I believe I have the right to close, do I not? Does the gentleman have additional speakers?

No, we don't.

Mr. Chairman, this amendment would enrich lenders and really gut the bill, damage communities and damage home values. In the bill there is a responsible provision for lenders who have had their mortgages adjusted in chapter 13 to recover on a graduated basis, should property values appreciate at sale. What this amendment would do would be to turn homeowners into renters for life.

I will just point out something else. In bankruptcy law, if you are a speculator, you go in and you buy three condominiums on spec, and you hope you are going to make a fortune on it. But, instead, the market turns. You go into chapter 13, you can get the principal written down, you can get the interest written down but the homeowner in a condo cannot.

I would point out that if condo values rise, the speculator under the Price amendment gets all the value, the lender gets none. Only the homeowner would be made a renter for life. Now, how is that fair in America, a country that's looking for fairness?

I would like to note that currently, if a lender forecloses on a home, it receives none of the home's appreciation. So what is in the manager's amendment, the balanced amendment--I want to credit Mr. Marshall for his excellent work in putting this in--is a vast improvement over current bankruptcy law as it relates to homeowners.

Now, why is this important? Lenders benefit by getting part of their appreciated value and by savings on foreclosure costs. Homeowners share in the value of their home's increasing value, and that's the American Dream.

I would note also that it provides incentives for homeowners who have gone through the tragic circumstance of losing so much and reorganizing in chapter 13 and the stigma that that entails. It provides them incentive to continue to keep up their properties, to paint their houses and to keep up appearances because they have a stake in the future as well, it's not just some remote bank.

Finally, communities benefit because homeowners have this incentive to maintain their properties. So it's important that this measure proceed. As I mentioned earlier, the Price amendment would basically gut this bill and that would be a mistake.

With 6 million homeowners facing foreclosure, that is a disaster not just for those 6 million but for their neighbors. I have seen areas in our country where half the houses are in foreclosure, and I will tell you, it's a nightmare for everyone in that community. The meth dealers move in, the property values decline.

Reject the Price amendment.

Mr. Chairman, I rise to support this amendment offered by my colleague from Michigan (Mr. Peters).

It was a pleasure to work with him to reach agreement on his amendment, and I appreciate his commitment to ensuring that Americans have credit counseling under the Bankruptcy Code, especially in these difficult economic times.

His amendment, Mr. Peters' amendment, ensures that homeowners will be able to meet their obligations, to obtain credit counseling without risking foreclosure. It strikes the right balance, and it shows real foresight, judgment and skill on Mr. Peters' part, and I appreciate supporting his amendment, and I appreciate his presence here in our body.

Mr. Chairman, that is not a germane point. I would raise a point of order.

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

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:

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 205 and ask for its immediate consideration.

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

General Leave

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

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

Mr. Speaker, H. Res. 205 provides for further consideration of H.R. 1106, the Helping Families Save Their Homes Act of 2009. As I've previously stated, the Helping Families Save Their Homes Act takes a crucial step toward reviving our housing market, stemming the tide of home foreclosures, and putting our Nation's economy back on track.

This bill provides for a safe harbor from liability to mortgage servicers who engage in loan modifications to remove any impediments that may prevent them from partaking in voluntary modifications. It also makes much-needed changes to the HOPE for Homeowners Program in order to encourage more lenders to participate and ensure that the program meets its intended objective.

The bill further 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, in order to both enhance the liquidity and stability of our banking institutions, and help restore confidence in our financial system.

The underlying legislation, Mr. Speaker, also makes several long overdue changes to our bankruptcy code. Now, some have understandably questioned these provisions which would allow bankruptcy judges the ability to modify loans on a homeowner's principal residence if the homeowner meets specified stringent criteria. It has been argued that allowing judicial modifications will lead to a sudden slew of bankruptcy filings, will cause massive losses to financial institutions, and will increase the cost of borrowing for other homeowners. However, this will simply not be the case.

Bankruptcy will remain, as it always has been, a last resort. And modifications will be at the individual discretion of a bankruptcy judge who will determine if a borrower has acted responsibly and if a claim has any merit.

Most importantly, allowing judicial modifications will maximize, not lessen, the value of troubled mortgages for lenders, and will avoid the continuous decline in property values in neighborhoods with foreclosed properties.

Additionally, this rule provides for a revised manager's amendment that will make the bankruptcy provision and this legislation even more effective and efficient. The revised manager's amendment will allow a court to consider lowering the interest rate to reduce a homeowner's mortgage payments in lieu of reducing the mortgage principal.

It also gives mortgage holders a greater proportion of a home's appreciation should the home be sold during the bankruptcy plan, and it makes changes to the good faith requirement, further ensuring that judicial modifications are only used when borrowers have exhausted all other options.

The bankruptcy provisions in this legislation with the changes proposed in the revised manager's amendment will help thousands of American families stay in their homes. We must remember that bankruptcy is no walk in the park. It is a strict, demanding, and intrusive process in which every aspect of one's financial life is scrutinized and controlled, and that says nothing of the negative stigma and of the long-lasting effects of filing for bankruptcy.

In addition, to be eligible for such loan modifications, families must show

that they will be able to repay their debts and that they have tried to obtain a loan modification outside of bankruptcy, but let's not kid ourselves. Under current law, similar loan modifications are available for every other type of secured loan except for loans securing primary residences.

If a millionaire or a billionaire can modify a loan on a private jet and if a housing speculator can modify loans on countless failed investment properties, why can't we allow struggling families to modify their mortgages so that they're not put out on the streets?

It's easy to stand up here and claim that this bill is simply a bailout for reckless homeowners; but as our Nation creeps deeper into this financial crisis, it is painfully clear that our housing market is having a rippling effect on the economy. Families who have acted responsibly and who have paid every single payment on time are finding themselves, in one way or another, swept up by the foreclosure crisis, oftentimes through no fault of their own.

As foreclosures rise, surrounding home prices fall, funding for vital public services goes down, financial institutions are saddled with losses, access to credit shrinks, and our economy grinds to a halt. This legislation will put a stop to this deadly spiral. It will rebuild this economy from the bottom up, for our Nation simply cannot recover if we here in Congress turn our backs on the millions of Americans struggling to care for their families and to stay in their homes.

Mr. Speaker, this bill may not help every family. It will, however, help responsible individuals stay in their homes, and it will mitigate the destructive impact of this housing crisis by clearing legal impediments to loan modifications, by improving the HOPE for Homeowners Program, by ensuring confidence in our banking system, and by finally making commonsense reforms to our bankruptcy laws.

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

Mr. Speaker, I am very pleased at this time to yield 2 minutes to the gentlewoman from California, a member of the Committee on the Judiciary, Ms. Zoe Lofgren.

I yield the gentlewoman an additional 2 minutes.

Mr. Speaker, I would advise the Chair and the gentlelady from North Carolina that I may have an additional speaker, but he or she has not arrived yet, and toward that end, I would reserve my time.

Mr. Speaker, I am very pleased to yield 2 minutes to Ms. Lofgren.

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

Mr. Speaker, I would say to my friend when he asked the question, why would anybody offer money for people if they knew that a bankruptcy judge was going to modify it--but what about those private jets? They tend to loan money for them. And I know a whole lot of rich people that went into bankruptcy for the express purpose of avoiding paying bills. So I don't buy into that argument. We're about trying to help people here.

Mr. Speaker, I yield 2 minutes to the distinguished lady from Texas.

At this time, I will not.

I will yield 2 minutes to the gentlewoman from Texas (Ms. Jackson- Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield an additional minute to the gentlewoman.

Mr. Speaker, I am very pleased to yield 2 minutes to my good friend from Missouri, a member of the Financial Services Committee, Representative Cleaver.

Mr. Speaker, I am very pleased to yield 2 minutes to my good friend, the gentleman from Texas (Mr. Al Green).

Mr. Speaker, I am very pleased to yield 1 minute to the distinguished chairperson of the Committee on the Judiciary, my good friend, Mr. Conyers.

I yield the gentleman an additional 30 seconds.

Mr. Speaker, I would inquire of the gentlelady from North Carolina if she has any remaining speakers?

Then I would reserve the balance of my time.

I continue to reserve.

I continue to reserve, Mr. Speaker.

Mr. Speaker, I yield myself the remainder of our time.

This is a good rule, Mr. Speaker, that not only addresses our current housing crisis but it also more precisely targets relief to those who need it most.

In January of this year alone, in St. Lucie County that I am privileged to serve, there was 1,372 home foreclosures, according to RealtyTrac. This was the second highest foreclosure rate in my State of Florida, up 44 percent from the previous year.

This legislation is not a giveaway, it is not welfare, it is a collective bill that will help those who have played by the rules. We must lay the foundation in this country to help us get out of this crisis, and we must make every effort to rebuild this country. We can't turn a blind eye to the nearly 6 million households in America that are possibly facing foreclosure.

Therefore, I urge my colleagues to support this rule that will put this great Nation back on track and will give millions of Americans the opportunity to continue living in their homes.

I urge a ``yes'' vote on the previous question and on the rule.

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

The previous question was ordered.