Mr. Speaker, this week the House is scheduled to take up H.R. 1106, the Helping Families Save Their Homes Act of 2009. While much of the controversy over this bill is focused on the title I provisions, the provisions in title II will…
Mr. Speaker, this week the House is scheduled to take up H.R. 1106, the Helping Families Save Their Homes Act of 2009. While much of the controversy over this bill is focused on the title I provisions, the provisions in title II will provide safe harbor for lenders willing to modify mortgages and improve the HOPE for Homeowners program.
Allow me to dispel a few of the myths surrounding this legislation.
Myth: The bill only benefits a small number of homeowners.
Fact: This bill will actually help all homeowners by protecting their neighborhoods from the negative effects of foreclosure. Every foreclosure brings down the value of nearby homes, further eroding the equity of homeowners who are up to date on their mortgages. Millions of middle class families are just one sickness or one layoff away from a possible foreclosure.
Myth: The bill rewards bad behavior.
Fact: This bill requires homeowners to negotiate with their lenders in good faith before they can even consider applying for judicial modification of their home loan through bankruptcy.
Myth: The bill is a dramatic change in the Bankruptcy Code.
Fact: This bill equalizes the rules by treating residential bankruptcies the same as corporate, farm and vacation home bankruptcies.
Mr. Speaker, I urge my colleagues to support this legislation.
I'd like to remind my colleagues that while much of the controversy over this bill has focused on the Title I provisions, the provisions in Title II will help thousands of homeowners and enjoy broad support. Providing safe harbor for lenders willing to modify mortgages and improving the HOPE for Homeowners program are much-needed reforms that will help stem the tide of foreclosures and protect our neighborhoods. I would like to take a few moments to dispel some of the myths surrounding the legislation that could also be referred to as the Neighborhood Protection Act.
Myth: This bill only benefits a small number of low income homeowners or homeowners who bought more house than they could afford.
Fact: H.R. 1106 will actually help all homeowners by protecting their neighborhoods from the negative effects of foreclosure. Every foreclosure in a neighborhood brings down the value of nearby homes, further eroding the equity of homeowners who are up to date on their mortgages. Furthermore, the foreclosure crisis has spread beyond victims of the sub-prime crisis or individuals who purchased more home than they could afford. As President Obama noted in his address to this body, millions of middle-class families are just one sickness or one layoff away from possible foreclosure. Without the ability to sell or refinance a home with a current value lower than the mortgage value, these families are out of options.
Myth: The bill rewards bad behavior.
Fact: H.R. 1106 requires homeowners to negotiate with their lenders in good faith before they can even consider applying for a judicial modification of their home loan through bankruptcy. And the bill prevents judges from modifying loans for homeowners who have the ability to make their payments or make other bad faith efforts to game the system. The specious argument that the bill rewards bad behavior is being promoted by the banks, who themselves were rewarded for their bad behavior by the previous Administration. After receiving hundreds of billions of dollars in taxpayer bailouts, the banks should be the last to complain. This bill is designed to help families who have worked hard and played by the rules, but are trapped by declining property values and escalating job losses.
Myth: The bill enables homeowners to avoid their financial responsibilities.
Fact: H.R. 1106 allows judges to modify a mortgage only in those cases where it is truly not affordable for the homeowner and even then judges can only reduce the mortgage to the fair market value of the property. Lenders are able to recoup the fair market value of the house, plus interest, which is much better than they usually secure in a foreclosure sale.
Myth: The bill is a dramatic change in the bankruptcy code.
Fact: H.R. 1106 equalizes bankruptcy rules by treating residential bankruptcies the same as corporate, farm, and vacation home bankruptcies. H.R. 1106 will give struggling families or individuals the same right to modify the loans on their primary homes as wealthy investors have to modify the loans on their second or third properties.
Myth: The bill will dramatically increase bankruptcies.
Fact: Bankruptcy proceedings are unpleasant and scar one's credit record for years. No one looks forward to bankruptcy. And this bill provides stringent conditions, with a series of interim steps and requirements, so bankruptcy
proceedings are only used as a last resort after exhausting all other options to save a home.
Myth: This bill is another bailout for the banks and will cost taxpayers tens of billions.
Fact: H.R. 1106 actually redirects existing TARP funds from the banks to homeowners. It also will make sure the TARP funds are spent on economic recovery and neighborhood stabilization rather than salted away in some bank vault or paid to bank shareholders as dividends. This bill does exactly what the American people have asked for; it helps homeowners rather than banks and big business.
Mr. Speaker, H.R. 1106 is not a perfect bill, but it is one more piece in the mosaic of positive efforts we are making to turn our economy around. It is good for homeowners. It is good for the future stability of our neighborhoods. It is good for our nation's economy.
That is why I ask my colleagues to join me later today in supporting