I thank the ranking member. I rise in opposition to H.R. 830, the FHA Refinance Program Termination Act and also the other bills that will be coming to the floor on the same subject. I want to emphasize one thing that the ranking member…
I thank the ranking member.
I rise in opposition to H.R. 830, the FHA Refinance Program Termination Act and also the other bills that will be coming to the floor on the same subject.
I want to emphasize one thing that the ranking member has raised, and that is that these are voluntary programs. These are all voluntary programs that are trying to keep American families in their homes. These programs require the banks to agree that this is a good deal and it's deserving of these homeowners. These programs require that the homeowner also agree, obviously, and also that in many cases that the servicer agree.
Now, because you're requiring a voluntary agreement and an agreement that has been crafted in such a way that all parties are balanced in their interests, it's been difficult to generate the number of families to be helped so far.
I do want to also emphasize that this program started in November. This program started in November. We've had about 4 months to get families on board to be helped by these programs. For much of that 4 months, we have had abject resistance from the servicers. They have been the obstruction in making these programs work. But I am happy to say that in the last 10 days, we have had three major servicers, Allied, GMAC and Wells Fargo, that have finally come forward and said, we're going to work within this program, and we're going to try to help families stay in their homes not out of charity, but because they realize that we need to put a floor under this housing market in order to help sustain the weak economic recovery that we have going forward.
What exacerbates the situation is also the way the banks have handled this up until now. In my district, and it's happened all across the country, we've had situations where banks and servicers have employed robosigners to the point where many of these foreclosure documents have been signed without full knowledge by the individuals charged with that responsibility. We've seen many courts in this country look at the foreclosure process used by these banks and have ruled them to be illegal and that, in fact, the banks did not own the homes that they were trying to foreclose on. And this has happened thousands of times across the country. It has not been a smooth process.
We've also had a very, very difficult situation for our men and women in uniform. Despite the fact that there's been a law in this country since World War I that we will not foreclose on servicemembers' homes while they are in combat, while they are in Afghanistan or Iraq, we've had banks do hundreds and hundreds of foreclosures on our men and women in uniform. There are needs for these programs, and yet we are conveniently forgetting those facts.
Lastly, this bill, with all due respect, has been poorly drafted in a meaningful way. This bill, if adopted, would prohibit all voluntary agreements between parties to stop these foreclosures. And I understand what the targets of my Republican colleagues are, but the bill is drafted so broadly it would prevent the banks, the FHA, the homeowner and the servicer to come to a voluntary agreement.
Private enterprise has been something that my colleagues used to encourage, and here we have voluntary agreements that will be prohibited by this bill. And I do not think that is the intent of the gentleman, however, that is the actual impact of his legislation. And I have an amendment more specifically to deal with that at a later time. But we have to slow down the foreclosure process to put a floor under this economy. We have to help the families that can be helped. And this FHA Refinance Program Termination Act would prevent that from happening.
Madam Chair, I have an amendment at the desk.
Thank you, Madam Chair.
I want to, first of all, clarify what this bill is intending to do. The goal of the bill by my colleagues is to end the FHA Refinance Program. While I do support voluntary workouts--and I think that's the best way to approach the problem--I want to point out that the bill as it is written does not allow that to be accomplished by the FHA. Not only does the bill eliminate the targeted programs that have been identified, but it also, in its breadth, eliminates the possibility of any voluntary agreements outside this program. That's what my amendment would seek to address.
I do know that the CQ House Action Report indicated that I was amending section 2. However, I want to make sure that they understand that the language my amendment addresses is section 3: Termination of FHA Refinance Program.
Basically, to understand it, what this amendment would do is: The FHA facilitates mortgage workouts and other actions under its purview through mortgagee letters. These are written guidances to mortgagees, lenders, HUD-approved counselors and appraisers--essentially, anyone who is actively providing services on behalf of or with the permission of HUD. Similar guidance is done for other HUD programs.
Administrative law dictates that the agencies can issue administrative guidance that interprets statutes and regulations that we adopt, and it requires public notice and comment, and must be based on an authorizing statute. The FHA's guidance for lenders comes in the form of handbooks and these mortgagee letters, which essentially provide periodic advice and clarification while we are trying to do these voluntary agreements. Last year, the FHA issued 43 separate versions of this mortgagee letter. So far this year, it has issued about 14.
My amendment would strike the text that I believe and that the FHA believes would interfere with the rest of the work that the FHA is doing in its operation. These are not areas targeted by the bill by the gentlewoman from Illinois. The bill provides that anything substantially similar to what they have prohibited in section 2, which is a mortgagee letter titled 2010-23, would also be prohibited.
That creates a problem. That stops the FHA from doing a lot of the other work that both sides agree needs to be done. We are talking about voluntary agreements where the bank and the servicer and the homeowner agree. Basically, that would be stopped by this legislation. So I'm not trying to undo the targeted work that you're trying to do. I'm just trying to let the FHA do its job in general.
I also want to remind the gentlewoman from Illinois that the FHA, by itself, cannot recreate the finance program through a mortgagee letter. It can only do so if it is legislation that is clearly underlying its action. All the mortgagee letters must go through departmental clearance and must be viewed by OMB before they become official guidance. So I am asking that this amendment be accepted to clarify the action of the bill, itself.
I yield back the balance of my time.
Madam Chair, look, I will concede that the gentlelady from Illinois has raised a lot of good points. Unfortunately, none of them are relevant to my amendment. If you look at section 2, which is what you just talked about, that remains intact. That remains intact.