Providing for further consideration of the bill (H.R. 1728) to amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to provide certain minimum standards for consumer mortgage loans, and for other purposes.

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

I rise today in opposition to this rule and to the underlying legislation. This structured rule does not call for the open, honest debate that has been promised by my Democrat colleagues time and time again; yet here we are again discussing the mortgage reform bill for the second day.

It is essential to provide for more transparency and accountability in the lending process, but there is also a laundry list of important issues that face this Congress. And all this week we will have but one bill on the floor of the House of Representatives to debate. I think that's unfair to the American taxpayer when there is much work to be done.

Today not only will we be discussing the flawed underlying legislation, which is already addressed in Federal statute, as we spoke about yesterday being on the floor, that Federal Reserve has already issued the rules and regulations as a result of feedback from industry last year, but what we are here to do is to try to redo that to put the majority's mark on that legislation, which already takes care of the problem.

But this legislation that we're going to handle again today limits choice, reduces credit, and increases costs to consumers and taxpayers at a time when the effort should be about making home mortgages more reliable, least cost conscious, and making sure that consumers would be able to have an opportunity to have a chance to have a home. But what we are going to do is, by allowing a patchwork of State laws to confuse the system, we are going to now create qualified mortgages which require lenders to hold 5 percent credit and creates a $140 million slush fund for trial lawyers. So what we are going to do is limit choice, reduce credit, and increase costs, and make sure now there is a slush fund for trial lawyers to sue the same companies that we were trying to encourage

to lend to the marketplace so people could have money.

Madam Speaker, you will also hear about the amendments that our Democrat majority has made in order and failed to make in order today, no matter how substantive those amendments were.

We have heard the number of amendments that were made in order. My good friend knows that there were about 20 Democrat amendments that were put into the manager's amendment. So the 8-5 ratio is a little bit deceptive. It should be 8 plus 20, it's 28 versus 5 Republican amendments.

I offered two amendments in the Rules Committee last night, and both were struck down on party line vote--I guess that's no surprise. One was to limit trial lawyers access to taxpayer funds, and one was to ensure organizations like ACORN or any organization that receives money from the Federal Government, are more transparent and accountable with any government funds they receive.

At the end of 2007, the Board of Governors of the Federal Reserve undertook careful review of the abuses in the mortgage process system, and they took public comments, held public hearings across the country. And after careful deliberations, they finalized new comprehensive mortgage rules. These rules are going to take effect 5 months from now in October.

So not only are we spending all of 1 week on one piece of legislation, but the necessary regulations already exist in Federal statutes, and companies all across this country are already aiming at implementing those rules and regulations being ready for October.

This legislation fails to address the uneven patchwork of state mortgage lending laws and leaves lenders and consumers with unfair and confusing laws where the costs will ultimately be borne by customers. While this legislation attempts to establish is a new class of loans called qualified mortgages which will enjoy safe harbor and exemption from further restrictions in this bill, this will ultimately limit consumer choice on mortgages and unduly burden the mortgage industry, essentially excluding numerous safe and affordable mortgage products that serve and have been good to borrowers as well.

Madam Speaker, the Democrats are here today to say that they are on the side of the consumer and the borrower, even if it limits choices and raises interest rates for every single consumer that chooses to use this avenue to buy a home. Mr. Michael Menzies, on behalf of the Independent Community Bankers Association, in committee hearings on April 23, 2009, stated, ``Lots of this legislation simply increases our cost of doing business rather than helping us do a better job with our customers.''

Another regulation that will narrow choice, lessen credit and increase costs for borrowers and taxpayers is the lender risk retention provisions requiring lenders to retain at least 5 percent of the credit risk presented by all loans that are not deemed qualified mortgage. While I do believe that it is important to have some ownership in your investments, these far-reaching requirements would make it impossible for many lenders to operate, especially small and local lenders.

With the current economic crisis and all the efforts to inject capital into the financial services sector, why would we want to limit the use of capital and threaten to further impair banks' abilities to lend? Madam Speaker, this is not a solution for the ailing economy.

In addition, this legislation directs HUD to establish a brand-new $140 million slush fund for legal organizations to provide a full range of foreclosure-related services. Madam Speaker, my friends on the other side of the aisle actually take these steps simply to fund trial lawyers in this legislation.

If this doesn't force a flood of litigation, I really don't know what will. And Margot Saunders of the National Consumer Law Center, a consumer-advocate organization, said on April 23, 2009, in the Financial Services hearing, ``We have tried to propose repeatedly that you draft a simple bill that creates market-based incentives for enforcement rather than litigation opportunities,'' and I might say, which is full in this bill.

In other words, what we are doing is looking for paying lawyers to come and do what we should do here in this body with thoughtful, honest, straightforward legislation, which is why I offered an amendment in the Rules Committee last night, that of course was defeated on a party-line vote.

Madam Speaker, I include the amendment in the Record.

Amendment to H.R. 1728, as Reported Offered by Mr. Sessions of Texas

After section 220 insert the following new section:

Madam Speaker, we began this debate and discussion yesterday where we were trying to talk about the impact of this bill and what feedback would come as a result of hearings that Chairman Frank did have, and one of them, one of the outcomes of that, was a letter dated May 5, 2009. The letter comes from the Mortgage Bankers Association, one of the primary impacting organizations and, certainly, they are there in communities to serve on behalf of the American people for people's housing needs.

Madam Speaker, I would submit for the Record a letter that was sent to Speaker Pelosi and Leader Boehner about their feedback about this legislation.

Mortgage Bankers Association,

Washington, DC, May 5, 2009.

Hon. Nancy Pelosi,

Speaker of the House, U.S. House of Representatives,

Washington, DC.

Hon. John Boehner,

Republican Leader, U.S. House of Representatives, Washington,

Madam Speaker, at this hearing that was held about this bill, a lot of feedback was provided by the marketplace--people who were impacted the most; people who every day are in front of lenders and trying to get people in homes.

Part of the feedback was provided from the American Bankers Association. I'd like to insert into the Record a letter related to that meeting and this legislation.

American Bankers Association,

Washington, DC May 6, 2009.

To: Members of the House of Representatives.

From: Floyd E. Stoner, Executive Vice President, Government

Relations and Public Policy.

Re: H.R. 1728, the Mortgage Reform and Anti-Predatory Lending

Act of 2009.

I am writing on behalf of the members of the American

Bankers Association regarding H.R. 1728, the Mortgage Reform

and Anti-Predatory Lending Act of 2009, which the House of

Representatives is scheduled to consider beginning on

Wednesday, May 6, 2009.

H.R. 1728 is far-reaching legislation designed to prevent a

recurrence of the problems in the subprime market that have

harmed many American homebuyers. We appreciate that this

legislation seeks to address the source of most of these

problems, the loosely regulated and largely unexamined

mortgage originators operating outside of the regulatory

structure within which federally insured depository

institutions function.

However, we are concerned that this major legislation can

have a negative impact on both insured depository

institutions and credit-worthy borrowers seeking to buy

homes--impacts which have the potential to impair economic

recovery. In considering any new legislation, it is critical

to recognize the significant regulatory and structural

changes that are already underway in the mortgage industry

that will provide much greater protections to consumers. It

is essential to recognize that the further changes proposed

in H.R. 1728 will be cumulative to the changes already being

implemented under revisions to Truth in Lending Act, Real

Estate Settlement Procedures Act, and Home Mortgage

Disclosure Act regulations.

We have worked with the Financial Services Committee and

are pleased that a number of concerns were addressed either

prior to, or during, Committee consideration of the

legislation.

While we greatly appreciate the comprehensive, inclusive

consultation that has gone into the drafting process so far,

and the desire to avoid unduly restricting credit, we remain

concerned that the bill still, in our view, needs serious

work.

We plan to work with the Congress as the legislation moves

forward to clarify additional areas of concern. To that end,

we offer the following comments.

Safe harbor: The legislation creates a category of

``qualified mortgages'' which are given a safe harbor from

the expanded liability of the legislation. ``Qualified

mortgages'' are also exempt from certain other key

restrictions in the bill, including the risk retention

requirements. While the very narrow safe harbor included in

the original bill has been expanded beyond just 30 year fixed

rate loans, we are concerned that it is still far too narrow.

An amendment adopted during Committee consideration of the

bill expanded the safe harbor to include fixed rate loans of

terms other than 30 years, as well as some adjustable rate

mortgages. However, the language on adjustable rate mortgages

(ARMs) remains too restrictive. To qualify for the safe

harbor, ARMs would have to be underwritten to the maximum

rate possible during the first seven years of the loan.

Consider the example of a five year ARM with the initial

rate set at 5 percent and with caps on increases in later

years set at 2 percent per year. Under the pending bill, this

loan would have to be underwritten at a rate of 9 percent

(because in the seventh year of the loan the rate could--but

by no means is likely--to go to 9 percent for that year). In

this instance, even though the borrower could not pay more

than 5 percent for the first five years of the loan, and not

more than 7 percent in the sixth year, they would have to be

able to afford the loan at 9 percent for all seven years in

order to qualify. This will shut the door to affordability to

many borrowers. We strongly recommend that this provision be

altered to reflect a more realistic underwriting standard.

Similarly, we are concerned that to be included in the safe

harbor, loan points and fees must be limited to not more than

2 percent of the loan amount. The bill should be clarified to

ensure that bona fide discount points paid by a borrower to

reduce the interest rate on a loan are not included in this

calculation. The relevant threshold in this instance should

be the annualized percentage rate (APR) as currently defined

in regulation implemented pursuant to the Truth in Lending

Act. We also believe that the 2 percent cap should not be

statutory, but instead should be determined by the federal

bank regulators to accommodate small dollar loans which may

carry fixed fees taking the loan beyond a 2 percent cap. The

bank regulators are better suited to determining the

appropriate cap on fees paid in association with different

loan products.

Risk retention: We are pleased that the bill was modified

during Committee consideration to provide the bank regulatory

agencies with the authority to exempt loans (beyond those

exempted under the safe harbor) from the 5 percent credit

risk retention provisions of the bill. While this expanded

regulatory discretion is a step in the right direction, we

remain firm in our conviction that federally regulated and

examined insured depository institutions should be exempt

from risk retention requirements. Insured depositories

already have significant risk retention--and the capital to

back that risk. Loans sold by insured depositories into the

secondary market frequently include recourse agreements, so

that if there is an underwriting or other error or omission,

the depository can be forced to buy the loan back. Again,

because insured depositories have strong capital positions,

they can and do buy back recourse loans. The same cannot be

said of other lenders who lack capital. For these lenders,

greater risk retention is needed. For insured depositories,

it is not. We recommend excluding insured depositories from

the risk retention provisions of the bill.

Uniform national standards: We are gravely concerned with

the enforcement provisions of the bill, especially in light

of an amendment adopted in Committee which would grant state

attorneys general enforcement authority over the Truth in

Lending Act provisions added by the bill. The current

language of the bill will lead to conflicting enforcement

actions between state attorneys general and federal banking

regulators. It will cause confusion to consumers and lenders

alike and will generally undermine the regulatory framework

for mortgage lending in the nation. A confusing enforcement

scheme is likely to harm borrowers and provide the

unscrupulous with new opportunities. At a minimum, we urge

you to adopt clarifying provisions which would give the

federal banking regulators notice of a state attorney

general's intention to act, and allow the federal regulator a

reasonable time to act before the state is allowed to do so.

Such a framework is needed to bring order and clarity to the

process.

We anticipate a number of amendments during floor

consideration. As a general rule, we oppose amendments which

would increase regulatory burden on banks and their

employees, and support amendments which recognize the role

that regulated, insured, and examined institutions play in

protecting consumers' interests and in providing products and

services which benefit our national marketplace.

We appreciate the working relationship that has been

established between the Members of the Committee and all

interested parties, and we shall continue working with

Members of Congress as this legislation moves through the

legislative process.

This letter goes to all Members of the House of Representatives. So each of my colleagues openly received a copy of this. It is from Floyd Stoner, executive vice president with the American Bankers Association.

Here is what their conclusions are after seeing the legislation. They are ``concerned that this major legislation can have a negative impact on both insured depository institutions and creditworthy borrowers seeking to buy homes--impacts which have the potential to impair our economic recovery.''

So what the American Bankers are saying is that the answer, the antidote, the medicine that now-Speaker Pelosi is coming up with will actually have the potential to impair economic recovery.

So every single Member of Congress got this letter. We will find out today what their views are. But the American

Bankers Association also said, and pretty much ends their letter by saying: ``The bill still, in our view, needs serious work.''

We should reject this bill. We should understand that the people who are engaged in trying to make sure people have loans and are worried about our economy are saying it not only has the potential to impair economic recovery, but the bill needs serious work.

I reserve the balance of my time.

I yield myself such time as I may consume.

I appreciate the gentleman coming down and talking about how Republicans are to blame for all this mess, but I'd like to harken back to September 25, 2003, at a hearing that was held back in the Financial Services Committee.

Our current chairman, Barney Frank, who's a very thoughtful and diligent chairman, thoughtful on the ideas of the entire industry, said, ``I don't think we face a crisis.'' This is 2003. ``I don't think we face a crisis. I don't think that we have an impending disaster. We have a chance to improve regulation of two entities I think that, on the whole, are working well.''

So perhaps the most thoughtful person in the country, certainly in this Congress, back on September, 25, 2003, is saying, ``I don't think we face a crisis, and I don't think we have an impending disaster.''

Further, he said, ``I don't see any financial crisis. You can always make things better, but I do think we should dispel the notion that we are here today because something rotten has gone on.'' That was Barney Frank. That was Barney Frank at the hearings.

So the gentleman wants to blame Republicans. And yet, here we had the lead, very thoughtful and articulate, Democratic ranking member, arguing that there was nothing wrong and nothing was about to happen. Yet, today, what we have is another answer: Oh, I'm sorry. We forgot to say, and we know that the Fed has already taken care of this problem with rules and regulations that are already known and will be in place in October.

Here we have now legislation to re-address that issue. And the answer that comes back from the marketplace is, This legislation limits choice, reduces credit, and increases cost to consumers and taxpayers.

I would have assumed that if there was nothing wrong in 2003, and now we corrected it with a series of hearings, including the Federal Reserve, that we would want to help the marketplace--not limit its ability, its choices, and put exposure to taxpayers. That's why we're opposed to this.

We're opposed to it not because we're trying to stop it, but because we're trying to make it better. We think what should have been made better has already been done by the Fed. This Congress knows it.

Every single Member of Congress got a letter to their office directly from the American Bankers Association saying serious flaws in this legislation.

I reserve the balance of my time.

Madam Speaker, I appreciate the gentleman. By the way, the gentleman and I are friends. We are speaking about policy here, disagreements.

I would say to the speakers that have come on the Democratic side today, it sounds like an argument they are having within their own party. Everybody is trying to blame the Republican party and George Bush for what happened; yet, if the gentleman didn't like 2003, I will go to the end of 2004, December 16, 2004, if we need to get more current. And I will quote the gentleman, the chairman of the committee:

``The SEC's finding that Fannie Mae used incorrect accounting is serious and disturbing. While these improper decisions by Fannie Mae do not threaten the financial soundness of the corporation, and should have been used by anyone in an effort to cut back on Fannie Mae's housing efforts, they do not reveal troubling deficiencies in its corporate governance.''

All of these signals that came to Members of Congress from people who were on the committee, including one of the most distinguished members of the committee, said: We don't have a problem. There is no soundness problem. There is no weakness problem. I don't see a financial crisis. Sure, we can always do things better, but I think we should dispel the notion that we are here today because there is something that is rotten that has gone on.

Well, why are we trying to extend blame? Why don't we just talk about the problem that we are in today? And if we are going to do that, my notion would be that what we should do is listen to the people who are in the banking business saying this is a problem. This bill has serious flaws.

Madam Speaker, I yield 5 minutes to the gentlewoman from Minnesota (Mrs. Bachmann).

Madam Speaker, at this time I yield 2 minutes to the gentleman from Egan, Illinois (Mr. Manzullo).

Madam Speaker, I am really down to no speakers and just my closing statement. So I would encourage my friends to go ahead and utilize their time, and then I will close as appropriate.

Madam Speaker, in closing, I would like to thank the gentleman from California and each of the Members from his side who have participated today, including the gentleman, Mr. Frank. I would like to stress that while my friends on the other side of the aisle claim to be protecting consumers and have said that people want to delay this legislation, that is not true. It has already taken place. Whatever we need, the Federal Reserve has already done.

What we will say is that what this legislation is doing is benefiting trial lawyers with tax dollars. And perhaps more importantly, it is causing this circumstance to be aggravated and to be worsened.

We already understand there will be less credit that will be available. This will raise the costs of loans and mortgages that people will want to receive. At a time, especially, when the economy needs help, this will harm the economy. And that is directly what the American Bankers Association has said in a letter to every single Member of Congress. So I hope every single Member should hear this. They need to be talking to their staff, ``hey, did that letter come in on this legislation that we are handling today?'' And that letter says, ``serious flaws, serious flaws, bigger problem.''

We need to be providing for jobs. We need to be encouraging economic growth. We need to encourage investment. And this legislation does not accomplish that.

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

Mr. Chairman, I offer amendment No. 2.

Mr. Chairman, I am here to correct a mistake I made in my haste to get the markup concluded so we could have plenty of time to get the reports done, the bill on the floor. I agreed to an amendment that I had not read carefully.

The amendment would ban any organization, any organization in America, from receiving housing counseling funds if anybody in that organization is indicted by any prosecutor anywhere for Federal election or voter fraud.

So I rise to vindicate an important principle of American law that indictment should not be a cause of serious penalty, that people should continue to be presumed innocent until proven guilty.

To allow any prosecutor, anywhere in America, to tell any organization that it is ineligible for these funds, simply by an indictment, is, it seems to me, inappropriate.

I would point out that while there is an effort to claim that somehow this is specific to one organization, that may be the intent, but this bill earmarks no funds for any organization.

And it says, here is what it says about the funds: The Secretary shall make financial assistance available to HUD-approved housing counseling agencies and State housing finance agencies. So we have HUD- approved counseling agencies--these are approved now on the list from the last administration--and State housing finance agencies.

I have some confidence in them and those who are worried, my amendment says if there is a conviction and the person isn't fired, you cut off the funds.

But to cut off funds that were given by an approved HUD counseling agency because once persons anywhere in America were indicted by some prosecutor, is a violation of the basic principle of fairness.

I reserve the balance of my time.

How much time remains to me, Mr. Chairman?

I yield myself such time as I may consume. The gentlewoman from Minnesota said, ``Do we want to allow funding for people who employ people who are under investigation?'' Yes. I don't want to live in a society where the mere instituting of an investigation by any prosecutor anywhere shuts down lawful activities.

Now, she said an organization that's under indictment, but the amendment

goes far beyond that. Any individual member of an organization, no matter how far flung, apparently, according to the gentlewoman from Minnesota, if an investigation begins of anybody, you shut them down.

The gentlewoman from Minnesota mentioned someone who has been convicted. Under the amendment I offered, that would end it. We would either have to fire that person or lose the funding.

No. The conviction triggers it. No question. That's what is in the amendment. My amendment says if you are convicted, it's triggered. But to say that any individual who works for any organization who's indicted, shuts it down. The gentlewoman said, Are you on the side of ACORN?

The issue is this: the gentlewoman, I think, inaccurately says, Are you for ACORN or the American people? This bill says nothing about ACORN. This bill says that approved HUD counseling agencies and State financing agencies can make the choice.

What I think the amendment says is this: Are you for the principle of American justice that says the mere institution of an indictment by any prosecutor anywhere, at any level?

Mr. Chair, I have told the gentlewoman I would not yield. Could she be instructed that that is the answer that she's going to get, and to stop interrupting?

There are some basic rules like the ones of debate. Also, the fact that I said that to empower any prosecutor anywhere, at any level. And this isn't about ACORN. We don't sit here to judge on this or that organization. The gentlewoman said we don't judge guilt or innocence. Well, the amendment tries to do that.

The amendment says: a guilty finding by statute; in the absence of a guilty finding, in a court of law. Because if there's a guilty finding in a court of law, under my amendment, then this denies funding to people.

There are a lot of prosecutors. And it's not just ACORN. There are a lot of organizations, including political parties in the State of New Hampshire, near me. The Republican Party operatives were convicted of election fraud. I don't think that means you go after everybody else. It certainly didn't mean pending indictment you do this. There ought to be a bright line between penalties for indictment and for conviction.

Now if the amendment had said a pattern of indictments, that's a different story. It might have been a better argument. But this says a single indictment of any individual by any prosecutor for any organization anywhere in American has these negative consequences.

I think we have seen enough of prosecutorial misconduct, whether it was Senator Stevens or whether it was Members on both sides of the aisle, whether it has been organizations that have been prosecuted. I don't think we want to set that principle. Remember, this is precedential. Once we set as a body the legal principle--apparently, it was in the earlier bill. It shouldn't have been. If I missed that, I apologize.

I want to now repudiate the notion that the action of a single prosecutor who may be politically motivated to indict anybody anywhere for election fraud, disables that organization, forces the organization to fire an individual who may later be vindicated.

Yes, the gentlewoman said one of the employees of the organization that has motivated her amendment was convicted. My amendment says: in that case, you either fire the person or you lose the money.

Conviction ought to be the standard. But a single indictment by a single prosecutor anywhere, I do not think that is the rule of law under which Americans wants to live.

I yield back the balance of my time.

If the gentleman would yield, he said he is sorry the other body didn't move. There's a lot of that going around

Mr. Chairman, in the absence of anyone else, I will claim this time in opposition.

Mr. Chairman, the gentleman from Alabama has very accurately stated this. He worked with us until we got an amendment that did some good, that avoided some problems we thought we would have. So I hope the amendment is agreed to.

I yield to the gentleman for 30 seconds.

Mr. Chairman, I rise to claim the time in opposition.

First, Mr. Chairman, the gentleman's description of the safe harbor refers to an earlier version of the bill. In the committee, a bipartisan amendment offered by the gentleman from Delaware (Mr. Castle) and the gentlewoman from Illinois (Ms. Bean) significantly increased the safe harbor so it is not a 30-year fixed mortgage only that is allowed. Variants of time, certain ARMs, it is much more flexible.

The gentleman's comments apply accurately to a provision that is no longer in the bill; but it does not apply to what is in the bill.

My second point is that I am surprised at the back-and-forth attitude some of my most conservative colleagues have toward the Federal Reserve system. On the one hand, there has been a great deal of concern, which I share, about the unlimited power of the Federal Reserve in some areas. But time and again we are being told, as in this amendment, we should yield to the Federal Reserve our constitutional power to legislate.

This amendment says we will vote, but the bill will not go into effect until the Federal Reserve gives us permission. Now I have a good deal of confidence in Mr. Bernanke, but the notion that we would cede to the Federal Reserve the power to enact legislation, where is Ron Paul when we need him? When did the Federal Reserve become the constitutional equal of the Congress of the United States?

So on that ground alone, I would oppose this amendment.

I reserve the balance of my time.

Mr. Chairman, first I guess I have to apologize to the gentleman from Georgia after listening to what he said. He chided me, mildly, in a friendly manner, for mentioning the dimensions of the safe harbor, he said it wasn't part of the bill, but I was only responding to his description of it. So I listened to him; he said the safe harbor was too narrow, it would push people into a 30- year. I responded. I thought when he raised it that it was relevant.

Beyond that, though, we do have this issue: do you tell the Federal Reserve that it will decide whether or not this goes forward? It also says, and there is a lack of balance here. If it says it will reduce the availability by any amount. Well, to some extent the purpose of

this bill is to reduce the availability of credit.

If Members believe that people got mortgages who shouldn't have been able to get them, then they ought to support a bill that will reduce the availability of credit. Frankly, the profligate availability of credit is a major reason for the current problem. So, yes, there are people who used to get mortgages who won't get them under this bill. Some lenders don't like that. There are lenders who made loans and they won't be able to make the loans under this bill, but that is precisely the point. The point is not to allow credit to be as loosely granted as it was even for qualified mortgages. People got mortgages who shouldn't have gotten them.

Now if you believe that not everyone who got a mortgage in the past should get a mortgage now, then it would seem to me you want to reduce the availability of credit. The question is: how do you do it? Do you do it in a sensible way? What is the balance? That is what we think is achieved in this bill.

I reserve the balance of my time.

I yield myself the balance of my time.

Yes, that is exactly the issue. The gentleman says, surprisingly to me, we want to increase the availability of credit.

Let's understand the problem. Too many loans were made to people who shouldn't have gotten them. In some cases it was the fault of the borrower; in some cases it was the fault of the lender; and in some cases the fault lies elsewhere. Yes, one of the important purposes of this bill is to reduce the pattern of people getting loans who shouldn't have gotten them because they couldn't repay them.

So to say that the purpose of this bill is to increase the availability of credit, is it to have more subprime loans, more borrowers who can't pay back?

Now you want to do it with balance and you want to do it in a reasonable way. I believe we deal with that. If there are questions do we go too far one way or the other, those are legitimate. We discussed a lot of those in committee. There were a lot of amendments that were adopted.

But I accept my colleague from Georgia's definition as the heart of the matter: Does this bill, if it is enacted, mean that fewer mortgage loans will be granted going forward than were granted in that period from 2002 to 2006, as the gentleman from Texas' amendment shows, when subprime mortgages shot up? I hope so. I hope that we will have fewer mortgages granted to people who couldn't have paid them.

Now other people, we hope things will go better. With the FHA piece, we hope to do even more in making credit available.

No, it says ``qualified mortgages.'' But part of the problem has been that people got mortgages with bad judgments by the people who made them.

Mr. Chairman, I rise, in the absence of any other claimant, to claim the time in opposition.

Mr. Chairman, I commend this bipartisan effort to address an issue that is particularly important in their district.

I yield back the balance of my time.

Mr. Chairman, I ask unanimous consent to reconsider my hasty action and take back my time.

I yield 3 minutes to the gentleman from Florida (Mr. Wexler).

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

The gentleman is correct. This does resolve the PAYGO issue. It makes it clear that this is not mandating, it's encouraging and that solves the problem.

Madam Speaker, by direction of the Committee on Rules, I call up House Resolution 406 and ask for its immediate consideration.

Madam Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. Sessions). All time yielded during consideration of the rule is for debate only.

General Leave

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks on House Resolution 406.

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

House Resolution 406 provides for consideration of H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act, under a structured rule. The rule makes in order 14 amendments, which are listed in the Rules Committee report accompanying the resolution. Five Republican amendments, eight Democratic amendments, and one bipartisan amendment have been made in order. Each amendment is debatable for 10 minutes, except the manager's amendment, which is debatable for 30 minutes. The rule also provides for one motion to recommit with or without instructions.

Finally, I would like to take a moment to make a clarification regarding the description of one of the amendments that has been made in order under the rule, specifically amendment No. 2 by Chairman Frank. The Rules Committee report inadvertently listed a description from an earlier version of this amendment. The amendment was later modified, but the change to the description was not updated. I want to emphasize that the actual amendment text which was made in order is correct.

Madam Speaker, I ask unanimous consent to submit for the Record the correct description for the Frank amendment listed as No. 2 in the Rules Committee report.

Madam Speaker, as we all know, our country is at a significant crossroads, the likes of which we have never known. Businesses continues to shed payroll, job losses continue to mount, and hardworking families across America continue to struggle.

Many economists have correctly stated that the foreclosure crisis is the root of our economic meltdown, and I firmly believe that until the housing market is stabilized, the economy will continue to worsen and people will continue to spend less, more businesses will shut their doors, and mass layoffs will further spread.

Until that happens, however, more and more American families are at risk of losing their homes. In the first quarter of 2009, more than 800,000 mortgage loans entered into the foreclosure process, with over 340,000 in March alone. Both are record highs, which goes to show that the foreclosure crisis is far from over.

I can personally attest to the damage the foreclosure crisis has left in its wake and the long effects it will have into the future. I have the honor of representing California's 18th Congressional District, which encompasses the San Joaquin Valley, but today my district is suffering like no other. My district has the highest rates of foreclosure in the Nation and a loss of 70 percent of home equity over the last 3 years. And with each passing month, it seems that the numbers are worsening.

As a result of the rampant foreclosures in my district, once vibrant neighborhoods have become vacant yards overgrown with weeds, and houses are crumbling from vandalism and disrepair. Swimming pools are abandoned at these houses and have become havens for mosquitos. Crime and vandalism are on the rise in what were previously safe neighborhoods.

Yet that's not all. Home values in surrounding areas are also beginning to plummet, and what started out as a foreclosure crisis in my district is quickly spinning out of control, creating economic disasters. In many parts of my district, they now face unemployment rates of over 20 percent. Small businesses and neighborhood restaurants which were once packed with customers are now almost empty and are shutting their doors at alarming rates. Our longest-serving community bank was swept up in the foreclosure crisis and recently closed. On top of that, my dairy farmers are in crises and we have one of the worst droughts in the country.

Madam Speaker, as I have been saying for quite some time, the devastation that has hit my district is massive and widespread and is somewhat similar to what Katrina left behind, only it was not caused on a single day by an extreme event but over the course of weeks, months, and years.

Long after the foreclosure crisis has come and gone, the Central Valley will continue to cope with the aftermath of this economic devastation for many years to come. My district and our Nation will not overcome this crisis overnight, and it will take unprecedented action to help us rebuild and recover.

Congress has taken several important steps and actions not just to combat this crisis but to ensure a housing crisis of this magnitude will never happen again. The bill before us today is one more step in that direction.

Some say the foreclosure crisis can be traced back to the rapid increase in subprime mortgages and risky underwriting practices, most of which were made with no Federal supervision. Many of the families targeted by subprime lenders were, in fact, low-income families with poor credit histories who felt this was the only opportunity for them to achieve the American Dream. They were lured into low ``teaser'' introductory interest rates which morphed into loans which they had little chance of repaying once rates increased, starting the uptick in the foreclosure market.

H.R. 1728 is aimed at preventing these predatory practices in the future. Among other things, H.R. 1728 requires lenders to prove borrowers can actually repay their loans in order to ensure that vulnerable consumers aren't pressured into loans at terms that they can't meet. It eliminates incentives to steer consumers into high-cost loans. It also provides much-needed regulation of the lending industry.

H.R. 1728 is not a cure for the foreclosure crisis, but it is an important component in eliminating the unscrupulous practices that ran amok and helped lead the collapse of the housing market.

I want to thank Chairman Frank for once again bringing this bill forward and for his continued commitment to turning the tide on our Nation's foreclosure crisis. I want to take this opportunity to thank Chairman Frank for working with me to insert language into the manager's amendment of this bill that would create and make publicly available a national database of foreclosure and default statistics, which we don't currently have. The Federal Government keeps track of many economic indicators, including home price declines and unemployment, but right now there is no government agency that keeps tabs on defaults and foreclosure rates.

As the foreclosure crisis has taught us, foreclosure and default rates are critical statistics not only for monitoring the Nation's economy but also for determining which areas of the country have been hardest hit in the downturn. My amendment calls on the Secretary of HUD to create this database so that the Federal Government and Congress can better detect and assess the housing crisis so that we can respond in a timely and targeted manner.

Again, I thank Chairman Frank for incorporating my amendment, and I ask my colleagues on both sides of the aisle to support the manager's amendment and the underlying billing so we can stop predatory lending and establish a federally maintained database on foreclosures and defaults.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I would just respond briefly on a couple of points and say that the gentleman continues to advocate for the policies that got us into this crisis. And, in fact, we need to regulate this industry, not because all mortgage bankers are evil; they are not. There are some very good ones. But the few have caused significant pain to both the economy, to our Federal Treasury and to individual homeowners.

Mr. Frank has designed a 5 percent solution that, in fact, I believe keeps the mortgage bankers with having skin in the game, so that they can't just sell off these loans, give bad ones and absolve themselves of responsibility and let the problem fall on the taxpayers.

Madam Speaker, I yield 3 minutes to the gentlewoman from California, my colleague on the Rules Committee, Ms. Matsui.

I would just reply to the gentleman from Texas that I anticipate that this bill will get wide bipartisan support. So we will in fact see if it does and see who comes forward and supports this bill further today.

Madam Speaker, I yield 3 minutes to the gentleman from Ohio (Mr. Driehaus).

I'd like to inquire at this time how much time each side has remaining.

Thank you, Madam Speaker. I would at this time yield 3 minutes to the chairman of the Financial Services Committee, the gentleman from Massachusetts (Mr. Frank).

I yield the gentleman an additional 30 seconds.

Madam Speaker, I yield 3 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.)

I yield the gentlelady an additional 15 seconds.

Madam Speaker, I yield 2 minutes to my friend and colleague from North Carolina (Mr. Miller), a sponsor of the bill.

Madam Speaker, I thank my colleague from Texas.

At this time, I would like to yield 2 minutes to the gentleman from North Carolina, a member of the Financial Services Committee, Mr. Watt.

Madam Speaker, I am the last person to speak, and I would like to reserve to close.

Madam Speaker, I would like to thank the gentleman from Texas for engaging with us this morning on a very constructive debate. However, we have serious disagreements on what this bill should look like.

Madam Speaker, in the last 18 months, the foreclosure crisis has not improved in our districts. And in most places, in fact, it has become significantly worse. In 2009, millions of Americans will default on their mortgages, and millions more will see their home equity drop precipitously. All of us know the potential consequences of this crisis. And for far too many of us, including those in my district, we are well acquainted with the depths of despair and destruction the foreclosure crisis has been inflicting on us.

Still, in spite of all the signs, small businesses that have closed on Main Street, foreclosure signs lining the neighborhoods, the unmistakable despair in the neighborhood coffee shops, I do believe there is reason for hope. The fundamentals of our economy and the spirit of the American people are simply too strong to throw in the towel because it may be an easier path. It is not time to give up. Rather it is time to redouble our efforts, strengthen our resolve, and focus not on what we have done, but what we will do to turn this economy around. If we do just that, I have no doubt we will overcome whatever challenges we may face, and we will fix this problem of foreclosures with the economy and the mortgage crisis.

I urge all my colleagues to support taking another step forward to stabilizing our housing market and helping our economy recover once and for all.

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

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

The previous question was ordered.

Mr. Chairman, I rise to claim time in opposition to the amendment.

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

There are some provisions in this amendment that I support and there are some that I don't.

One of the parts of it that I do support is the amendment does call for a GAO study to analyze the effectiveness of the risk-retention provisions of this bill and make recommendations to Congress. My only regret is I wish we could have done a study before we implement this particular piece of legislation.

As you know, section 213 of the bill requires creditors to retain an economic interest in at least 5 percent of the credit risk of each loan that is not a qualified mortgage that the creditor transfers, sells, or conveys to a third party.

I think a lot of people feel that this skin in the game may be a good provision. I think the question that arises is what will be the impact on small lenders and small community banks across the country? One of the things that we want to make sure is that the bill is not really clear about the mechanism or the mechanics of how this provision would be implemented, and we're going to have to have regulatory clarification on that. I wish that, again, we could have had a study in advance of that so that we could then make sure that, as we are implementing this bill, that the regulators have some direction of how to go to make sure we implement this provision without causing major disruption in the mortgage process. Again, I wish we could have done that before.

There are concerns that I have about the manager's amendment as well, Mr. Chairman. First of all, rather than clarifying provisions related to broker compensation, yield-spread premiums, and ensuring all types of mortgage creditors are covered by equal antisteering provisions, this amendment adds further inequity and confusion.

Congressman Miller offered an amendment during the Financial Services Committee markup that would have preserved the careful balance of banning steering while preserving a consumer's ability to finance the closing costs and origination fees associated with their loan.

In committee, Chairman Frank said he felt that he and Mr. Miller had agreed in principle about only banning incentivized compensation and not direct compensation. Mr. Miller withdrew his amendment, given the agreement by the chairman to work with him on details of the language. The manager's amendment does not reflect that agreement, and the Rules Committee did not make in order an amendment submitted by Mr. Miller. Really instead of clarifying the ability of consumers to finance closing costs and origination fees through rate or principal, the manager's amendment removes that option to finance through the rate completely.

Additionally, the manager's amendment says all origination fees must be collected either up front or all fees shall be in the rate. This means consumers, again, will no longer have the option of paying some closing costs up front and some through the rate.

Consumers should be able to finance closing costs and origination fees as they deem appropriate for their individual circumstances. Clarifications were expected to ensure the preservation of this option, but the only clarification made was that the bill will now only prohibit this option in the manager's amendment.

What does that mean? Well, that means when an individual goes to their mortgage lender or to their local community bank, in the past they have had an option to say, you know, I would need to put a certain amount of my closing costs in the loan and maybe that would be reflected in the rate. Maybe part of it would be reflected in the principal balance. But now we're going to take away the option for the banker to offer that to the individuals. And I think that's what our opposition has been to this bill from the very beginning, that while we are trying to prevent predatory lending, and everybody is against predatory lending, at the same time we've started down a road where we are going to limit the available products to individuals. We're going to raise the cost of these mortgages to individuals, and, more importantly, we're going to cause mass confusion in the marketplace.

There are some very punitive things in this bill that if someone is ``steering,'' that could result in a lawsuit. And steering could be, well, I think this mortgage, if I offered you this one, it would be beneficial to you but I also think if I offered you this mortgage. But I think it's going to deter a lot of mortgage bankers and community bankers from offering two different options to individuals because they're going to be afraid that somehow they are steering.

I have some other concerns which I will express further into the debate here.

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

Mr. Chairman, I appreciate the chairman's sensitivity to this because I think it is a very important issue that we need to resolve in this legislation before it becomes law.

I yield to the gentleman.

Thank you.

Mr. Chairman, at this time it's my privilege to yield 2 minutes to the gentlewoman from West Virginia (Mrs. Capito).

I want to speak to the gentlewoman's provision in this bill, and one of the concerns I have, I mean, there is a lot of people that want to debate States' rights versus Federal rights. One of the concerns I have about the provision in the manager's amendment is that it says yes. It says, yes, there is Federal jurisdiction and, yes, there is State jurisdiction.

What I am concerned about is that could cause some potential conflicts, and that States would think they had jurisdiction, the Federal Government would think they have jurisdiction, and that States might get the opinion that they might have jurisdiction on some of the other provisions in this bill.

And so one of the things that I think we need to make sure of, as we move forward on this legislation, is we have, maybe, clearer lines on this preemption statute to make sure that everybody understands what the rules of engagement are, as this particular piece of legislation is being implemented.

So one of the other pieces of opposition that we have to this is that we need a clear, I think a clearer preemption wording in this bill to make sure that we understand what the States' jurisdiction is over this bill and what the Federal jurisdiction is over this bill.

I reserve the balance of my time.

Mr. Chairman, another provision in this that has caused concern is the tenant provisions.

This amendment would require property owners to promptly notify any tenants or potential tenants upon becoming subject to foreclosure or defaulting on their mortgage loan. This language requires the owner to provide information on the circumstances with respect to the property and the effect of the default or foreclosure.

Notice to tenants is important. However, in multifamily projects such as apartments, a receiver is typically put in place to manage the property so that residents can remain in their apartments with no disruption. Mandating a notice to residents, if not done correctly, could cause alarm and maybe not even needed alarm.

I have a letter from the National Apartment Association where they have concerns about this very issue, that if you have got an apartment complex, the owner may be temporarily in default. You give notice to the tenants that you are temporarily in default. The tenants get scared, they start looking for other places to live, and, basically, creating vacancies, and, in fact, maybe making the default permanent by the fact that there will not be sufficient revenues to make the payments. So I have very large concerns about that.

Additionally, the amendment allows HUD to step in to troubled properties, transfer a multiproperty project, if delinquent, at the risk of fault or disinvestment or foreclosure.

This is a fairly major expansion of HUD's authority and could be considered to be a property taking. Property of this type may not be in foreclosure as yet, yet the provision would force properties into foreclosure or over into government control, again, a major expansion, quite honestly, a move away from what the original intent of this legislation was.

The original intent of this legislation was to prevent predatory lending. And now we are prescribing how tenants are going to be treated, whether we are going to force property owners to make disclosures about their financial condition, a major diversion from what I think is the intent of this legislation, and, again, one of the reasons that I do not support this amendment.

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

Mr. Chairman, I, again, rise in opposition to this amendment. One of the purposes of this legislation, again, we said, was to prevent predatory lending. But, unfortunately, the consequences of this legislation are going to be to increase the cost of mortgage financing for consumers.

It's going to raise the monthly payments for many consumers over what their choices would have originally been. It's going to limit the choices that are available to them. It's going to force lenders to provide maybe only one choice. It's also, I think, going to continue to cause a major disruption in the mortgage system.

As one of the speakers originally said, the market is very fragile right now, and some of the provisions in this amendment, I think, contribute to that.

With that, I encourage Members to vote against this.

I yield back the balance of my time.

Mr. Chairman, I claim the time in opposition.

I rise in opposition to this amendment, which strips down language in the bill designed to keep tax dollars from falling into the hands of organizations indicted for voter fraud or its related crimes.

It was last week during our Financial Services Committee markup of the underlying bill, I offered a straightforward amendment to limit eligibility for the housing counseling grants and the legal assistance grants authorized by the bill to exclude organizations indicted for voter fraud or that employed people indicted for such crimes.

Plain and simple, Mr. Chair, it should sound familiar to everyone here in this Chamber, because the exact same language was passed as part of the Housing and Economic Recovery Act of 2008 to prohibit groups, such as ACORN, from obtaining taxpayer-funded grants.

272 Members of this body, including the gentleman from Massachusetts who just spoke, voted for that legislation, which became law last July. But not only is it legitimate for Congress to decide the threshold for accessing taxpayer funds, it's incumbent upon this body to do so in our fiduciary capacity to the taxpayers of this great country. And for far too long Congress has cavalierly distributed taxpayer money.

Every day we can go on record saying we will no longer set the bar this low. We are all saying, fool me once, shame on you; fool me twice, shame on me. But ACORN and organizations like it have fooled us not once, not twice, but seemingly after every election. The stories of their indictments for voter fraud for violating their tax status for voter registration improprieties abound. Grand juries across the Nation have found them and their employees lacking. Yet we continue to funnel millions of dollars to their coffers.

Just last week, on Monday, the headlines out of Nevada read ``39 counts of voter registration fraud against ACORN and two of its former employees.'' It was just several hours ago, hot off the presses, that the Pittsburgh Post-Gazette reported breaking news, an Allegheny County district attorney charged seven employees with ACORN ``with forgery and election law violations, saying they filed hundreds of fraudulent voter registrations during last year's general election.''

Can't this body do something about this, Mr. Chairman? How many felony charges does it take to see that this organization has violated the public trust?

Congress isn't the arbitrator of guilt or innocence. Congress does decide to spend the people's money. At what point do we finally say that this organization is simply not worthy of the hard-earned money of the American people.

According to recent testimony at the House Judiciary Committee, ACORN has been under investigation in States, for, among other things, violations of the Tax Code, 501(c)(3); violations of the Federal Election Campaign Act of 1971; fraudulent voter registration activities; and failure to comply with State law in voter registration drives.

And here are just a few more headlines of late: January, 2009, a voter registration worker for ACORN in East Saint Louis was indicted on two counts of voter fraud for submitting forged cards for residents at nursing homes without their knowledge.

According to the AP in October of 2008, ``a suburban Philadelphia man was charged with forgery, allegedly altering 18 voter-registration applications during his employment with an organization [ACORN] whose voter-outreach efforts have become a flash point in the presidential campaign.''

CNN reported October 28 about an ACORN worker who helped register nearly 2,000 voters for the community group ACORN, not one of them actually existing, and he was convicted last year and spent nearly 3 months in prison.

The gentleman from Massachusetts says that his amendment is about due process. But I am sorry, Mr. Chairman, the American people are smarter than that. They deserve better than such an oratory sleight of hand. His amendment is about our duty as stewards of the taxpayers' dollar and mine.

Others say this is about the importance of the underlying grant program. But there are plenty of legitimate law-abiding nonprofits who have never seen an indictment that could still apply for these grants.

The bottom line is this: either you're against allowing organizations that engage in or employ individuals under investigation for voter fraud to receive tax dollars, or you aren't.

Mr. Chair, our votes on this amendment make our positions crystal clear to the people we serve. Are we on the people's side or are we on ACORN's side? We owe it to our constituents who are already tired, frustrated, and outraged by this cycle of spending and bailout and taxing and borrowing to at least show them that we aren't going to pick their pockets to fund groups that are about abusing their trust over and over again.

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

Mr. Chair, I would just end by saying I urge the people of this body to oppose this amendment, because as we stand in our fiduciary duty before the taxpayers, we need to make our vote clear--and our vote will say we either stand with the taxpayers of this great country, or we stand with ACORN.

Mr. Chair, I would yield 15 seconds to the gentleman from Alabama.

Will the gentleman yield?

Will the gentleman yield to answer your point?

Would the gentleman yield?

Mr. Chairman, I demand a recorded vote.

That's right. There is. But I'd say to the Members, there's an unprecedented number of homeowners that are delinquent on their mortgages and entering foreclosures. In fact, the Mortgage Bankers Association estimates that at least 11 percent of the mortgages now are delinquent and will probably go into foreclosure. This is creating really a desperate situation across the country.

Unfortunately, as all desperate situations, this situation has created opportunities for scam artists to take advantage of homeowners in desperate situations through so-called foreclosure rescue schemes. My amendment is designed to at least offer some protection to those homeowners from being victimized in this way.

It's just amazing that, whether it was in Katrina or other natural disasters or gas shortages, that people seem to take advantage and act their worst during times of struggle and crisis.

This amendment allows mortgage servicers to work together with the Neighborhood Reinvestment Corporation, which is a congressionally chartered organization, to make delinquent borrowers aware that they may be targets of fraud and inform them on how best to protect themselves.

The amendment is funded by dedicating 10 percent of the funds authorized under section 404 to this much needed form of housing counseling.

Many scam artists use publicly available information about defaults and foreclosures starts to contact troubled borrowers. In States with judicial foreclosures, lenders file a foreclosure action in a local court. In States where there's nonjudicial foreclosure regimes, lenders file a notice of default with the county recorder. All these records are available to the public and provide raw material for fraud artists to prey upon troubled borrowers.

In a classic loan modification scam, borrowers are duped into paying up-front fees for a loan modification that never occurs. In some cases, borrowers are told that in order to complete a mortgage refinancing needed to avoid foreclosure, they must sign over the title of the property. Another scam promises homeowners they can stay in their home as renters and buy back their properties at a later date.

On February 10, 2009, the administration released the Home Affordable Refinance Program and a Home Affordable Modification Program. Unfortunately, with the introduction of these new programs, unscrupulous persons or companies have yet again found new opportunities to defraud unsuspecting borrowers.

In fact, April 6, about a month ago, Treasury's FinCEN announced guidance to financial institutions on filing suspicious activity reports regarding loan modification and foreclosure rescue scams.