American Housing Rescue and Foreclosure Prevention Act of 2008
Floor Speech
AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008 -- (Senate - July 26, 2008)
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Mr. DODD. Mr. President, before he leaves the floor, let me commend our colleague from Vermont for his eloquence and his passion this morning on a subject that, as he says, ought to unite all of us, regardless of geography or political party.
I would be remiss if I did not recognize, as well, that the Presiding Officer today has been a champion of this issue during his tenure in the Senate. I thank the Senator from Rhode Island for his passion about this issue as well.
In the quarter of a century that I been here, as the Senator from Vermont has pointed out, this issue has been an issue that has not divided us along these lines. There have been those who, from time to time, have opposed low-income energy assistance but, by and large, this is a matter that has enjoyed broad bipartisan support.
While we are in the depths of the summer today, and there are those who are wondering what we are talking about, we talk about home heating oil and gas for the winter, we are only days away from those temperature changes.
Of course, for those who live in our southern States, the issue of heat exhaustion is something they live with all the time. And low-income energy assistance, as the Senator from Vermont points out, cuts across all geographical lines. It is the basic necessity. You cannot survive without it. Over the years, we have been able to do something to support it.
So I urge our colleagues, when the vote occurs later this morning on this issue, that we join on this matter and support the effort to provide for that low-income energy assistance.
I commend my colleague from Vermont, who has been patient about this issue over the last number of weeks. My hope is it will be supported. I hope we do on low-income energy assistance what we have done on housing.
I note the presence of my colleague from Alabama, Senator Shelby. I wish to begin my remarks by thanking my friend from Alabama. I thank him and our colleagues, Democrats and Republicans, on the Banking Committee.
The Presiding Officer and others, by a vote of 19 to 2, we came out of our committee back in March on a housing proposal. We have worked closely together over these last number of weeks in order to bring us to this moment, which I wondered if it would ever occur, given the number of times we have voted on this matter since March.
But in about 30 minutes, we are going to have a chance to finally decide whether this Congress is going to do something about the growing economic problems, basically founded and anchored in the foreclosure crisis of our Nation, that has now spread far beyond residential mortgages.
It is long overdue that this Congress respond. We are about to do so in a bipartisan fashion. Given the vote yesterday of 80 to 13, it is an indication of this what this body can do when we are determined to work together to make a difference.
So I wish to thank--I see my colleague from Georgia--Senator Isakson and others who have done a terrific job in packaging this proposal. If each one of us could write this alone, it would be different. We serve in a body of 100 Members. We need to work together to develop final products.
This is an example of what can happen when that occurs.
I am pleased we are finally ready to pass the Housing and Economic Recovery Act of 2008 and send it to the President's desk for his signature. This has been a long and arduous process. It started when Leader Reid, who has been remarkable and marvelous in this process, Leader McConnell, Senator Shelby and I, announced on March 31 that we were going to put together a bipartisan housing stimulus bill that would address the growing housing crisis. Not much more than 24 hours later, Senator Shelby and I, along with Senators Baucus and Grassley, brought the first version of the Housing and Economic Recovery Act to the floor where it received an overwhelming vote of 84 to 12. We continued to work over subsequent months to expand and improve the legislation so it would more thoroughly address the growing foreclosure and financial crisis. This is the product we present to our colleagues this morning.
This action is coming none too soon. Earlier this week data was released showing that home sales hit a 10-year low, falling 2.6 percent, over twice as much as what had been expected. Home prices continue to fall. The Census Bureau reported that foreclosures contributed to a record number of vacant homes in the second quarter. Merrill Lynch reports that June numbers show we now have 11 months of inventory of single-family homes. That is a 23-year high.
RealtyTrac reported yesterday that forecloses in the second quarter more than doubled from a year earlier and jumped nearly 14 percent from the previous 3 months. As you have heard me say over and over, every day between 8,000 and 9,000 of our fellow Americans are put into foreclosure. There have been a record number of bank seizures as well. This is happening in the United States. It simply ought to be unacceptable to every single one of us.
Bill Gross, the CIO of PIMCO, one of our largest investment funds, estimates our economy will face nearly $1 trillion in mortgage losses when it is all said and done. Martin Feldstein, who served President Reagan as chief economist, wrote in the Wall Street Journal in March:
The 10 percent decline in house prices has cut household wealth by more than $2 trillion, reducing consumer spending and increasing the risk of a deep recession.
This is a staggering loss of wealth we are seeing, coming at the very same time, as the Senator from Vermont has pointed out, that food prices, gas prices, health care, and education costs are rising. We are experiencing the worst of all possible worlds. Wealth is declining, the source of wealth creation, and costs are rising simultaneously. Moreover, when we consider the role that home equity has played in supporting consumer spending, we see the danger a vicious downward cycle could create, an economic disaster for our country.
Don't let yourselves be dulled by nameless and faceless statistics either. Behind each one of these numbers I have recited, there is a family--a mother, a father, children trying to grow up, facing unemployment, losing their homes, wondering what the future holds. So when we talk about the numbers, about how important this data is, pause for a minute, when deciding whether to support this bill, and remember: Behind every one of those numbers there is an American family who this morning is wondering whether their Congress can do anything at all about the problems they face.
In about 30 minutes, we will have an answer for that, I believe, an overwhelming one, that says: We are on your side. We want to make a difference to keep you in your homes and get back on your feet again. That is what this is all about--not the numbers but the faces. Those families are counting on us. In the face of these daunting challenges, I believe we all have a responsibility to act. That is what we are going to do this morning by passing this bill.
Let me quote again Mr. Gross of PIMCO, who wrote this past Thursday:
..... the omnibus housing/GSE bill now placed before the Congress and the President is the best way to begin the long journey back to normalcy [in this country].
I believe that to be the case. Treasury Secretary Paulson said the passing of this legislation is the most important action we can take to address the housing crisis.
This legislation will not perform miracles. I want the American people to have a realistic expectation as to what we are about to do. But as others have said, it is a step--I hope and expect an important step--toward putting our Nation on the road to economic recovery. Let me sum up the legislation very quickly before turning to my colleague from Alabama.
The bill establishes the HOPE for Homeowners Act to help at least 400,000 to 500,000 families stay in their homes. It does so after asking both lenders and borrowers to make financial sacrifices, and it does so at absolutely no cost to the American taxpayer.
The bill creates a new world-class regulator for Fannie Mae and Freddie Mac and the Federal Home Loan Banks. Recent news makes it clear these entities need a stronger regulator to ensure they are viable and healthy institutions, able to provide credit in times of stress such as we are experiencing today. It also raises loan limits from $417,000 to a high of $625,000 so the government-sponsored enterprises can play an even more active role in stabilizing the housing market.
At the request of Secretary Paulson, the legislation includes standby authority for the Secretary of the Treasury to purchase the stock or debt of the housing GSEs only if he finds such action is necessary to keep the financial markets stable and mortgage credit flowing. It is our strong expectation that creating this authority will make it unlikely that it will ever be needed. As I have said, the GSEs have significantly more capital than is required by law. They continue to have open access to the debt markets, and their holdings consist primarily of 30-year fixed rate mortgages.
The bill modernizes the Federal Housing Administration program, raising the loan limits from $362,000 to $625,000 so that 98 percent of the counties in the United States and 85 percent of the population will have access to this important program. FHA has proved its value in the current crisis, as it has continued to provide a stable source of mortgage credit even while many other lenders have failed.
The bill includes a permanent, affordable housing fund financed by Fannie Mae and Freddie Mac that will provide tens of thousands of affordable housing units. I tip my hat to the Presiding Officer, who has been a tireless champion on behalf of affordable housing. With the work of Senators
Shelby and Reed, we have a permanent, affordable housing program, the first time ever in our history. The bill includes new protections for elderly homeowners taking out FHA-insured reverse mortgages so they are not deceived, as many have been, into using the proceeds from these loans to buy expensive and needless insurance products. These provisions were incorporated from a bill introduced by our colleague from Missouri, Senator McCaskill.
The bill includes a new mortgage broker and lender licensing requirement added by Senator Martinez, with strong support from Senator Feinstein, that will begin to address the many abuses of the mortgage process perpetrated by brokers. In addition, it includes improved disclosure requirements added by Senators Reed and Bond. Because of the efforts of Senators Kerry, Coleman, Akaka, Cornyn, and Sanders, the bill expands the availability of the VA housing program and includes a number of provisions to help returning veterans save their homes from foreclosure, and provides new housing benefits to disabled veterans. The legislation includes $3.9 billion in emergency Community Development Block Grant funds for areas hard hit by foreclosures, to help them purchase and rehabilitate these homes and put them into productive use. As the Boston Globe wrote in an editorial earlier this month:
The major beneficiaries [of this provision] would be the urban homeowners to pay their mortgages diligently yet face declining property values, crime, and blight associated with a rash of foreclosures near their homes.
This body has repeatedly provided emergency funds to communities ravaged by floods, hurricanes, and natural disasters. The foreclosure crisis is every bit as much of a disaster. This is an emergency equally deserving of these funds.
Finally, the bill includes $150 million in new counseling money. Housing counselors have been our troops on the frontline, working with troubled borrowers and lenders. These funds, which were included at the request of Senator Murray, along with Senator Schumer, will result in tens of thousands of American families being able to keep their homes.
Let me close by saying again this legislation is the product of tireless collaboration in the Senate and the other body, the House of Representatives, with the work of Barney Frank and his colleagues on the Financial Services Committee and, of course, the administration, particularly Secretary Paulson and his staff, to help develop solutions that will strengthen our economy, restore confidence in our financial markets, and provide urgently needed relief to American families struggling to make ends meet. Such an outcome could not be possible without the full support and leadership of my colleague and ranking member, Senator Shelby. Every vote we have taken on this bill, from the 19-to-2 vote in committee to yesterday's 80-to-13 vote on cloture, has been strongly bipartisan. The American people can take some pride in this institution for our willingness to work together through these difficult issues to get such a good outcome.
Finally, legislation of this magnitude takes hours and hours of staff time to work out. There is never going to be an adequate expression for Senator Shelby and me to thank our staffs on the Banking, Housing and Urban Affairs Committee. They have been remarkable, beginning with the Senate staff director, Shawn Maher of my office, along with Jonathan Miller, Amy Friend, Roger Hollingsworth, Aaron Klein, Julie Chon, Jenn Fogel-Bublick, Sarah Kline, Kate Szostak, and Drew Colbert; legislative counsel Laura Ayoud and Rob Grant; Senator Shelby's staff--Bill Duhnke, Mark Oesterle, Peggy Kuhn, Jim Johnson--and from Senator Reed's staff, Kara Stein.
I thank Senator Harry Reid lastly, our majority leader, for his diligence, patience, and determination. We have been through six cloture motions, delay after delay after delay by a handful of Senators who were determined to do everything they could procedurally to stop us from getting to this moment. I thank immensely the majority leader, and his staff as well, for their tireless support of this effort.
Again to my colleague from Alabama, I tip my hat. He is a good man to work with, and I thank Senator Shelby.
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