Providing For Further Consideration Of H.R. 1106, Helping Families Save Their Homes Act Of 2009

Floor Speech

PROVIDING FOR FURTHER CONSIDERATION OF H.R. 1106, HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009 -- (House of Representatives - March 05, 2009)

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Ms. JACKSON-LEE of Texas. I came to the floor, Mr. Speaker, because I wanted to make sure that this was the day that the United States Congress addressed the question of responsible, hardworking Americans.

I came to the floor with my BlackBerry because there's a message about one of our renowned mortgagers, Countrywide, that is in the process of evicting one of my constituents--a hardworking, long-standing, if you will, working American trying to save their home. Long message as to what has been going on in this instance and the insensitivity of the mortgager.

So today is a day for being responsible. It is not a day for those who have, in essence, been irresponsible. It is a day to allow them, as every American has a right, their day in court with a judge with a fine-tooth comb who will review all of the documents and even including the responsibility of that particular petitioner to include all of the information on income, expenses and debts to the holder of the mortgage, with the second amendment including a particular clawback provision that increases the amount of money that the lender might get if the particular house was sold.

In addition, I am supporting this rule, but I do look forward to the conference, which I hope that I will be a participant, because, in fact, if these individuals are victims of predatory lending, which many of them have been--meaning that they would go to a servicer who would masquerade their documents and say they can get into a house--this particular action of bankruptcy should not be part of the credit score which then dumbs down the opportunity for this individual to restore themselves, get back into the economic market, be able to get credit, be able to buy things and turn this economy.

The SPEAKER pro tempore. The time of the gentlewoman has expired.

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

Ms. JACKSON-LEE of Texas. I thank the distinguished gentleman.

This is a fair and reasonable bill, along with the manager's amendment that, in fact, allows this particular homeowner, the person that is in this BlackBerry that is in the midst of an eviction having purchased a house in honesty with the lights on, putting forward the documentation but yet being subjected to that well-known mortgager, Countrywide, that gave vast numbers of, if you will, mortgages in the context that might not have been the most appropriate.

Today we are allowing the courts of law, the established bankruptcy court--established statutorily and protected by the Constitution--to allow someone due process. That's all we're saying, Mr. Speaker.

And all of this about irresponsible persons offends me because there are thousands, and now millions, of families who are simply trying to say, Keep the tax base for my struggling city, allow my neighbors to not have their homes depreciated because I have had the unfortunate mistake of being misrepresented to. Some of these people are still working.

I close by saying 3,500 people are in line for a job. Today is the little person's opportunity.

Mr. Speaker, thank you for your leadership on this very important question. Chairman Conyers and Chairman Frank, I would like to
also thank you for your leadership. Lastly, I would like to thank my able Legislative Director, Arthur Sidney, for his hard work on this issue.

The bill before us today is very important and will help Americans during this difficult economic time. As you know, home foreclosures are at an all-time high and they are poised to accelerate as the recession deepens. 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.

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.

Subprime lending did not always have a bad name; however, within the last five to seven years, unscrupulous lenders have preyed upon buyers in a predatory fashion. The amendment that I offered before the Rules Committee was intended to address this issue.Specifically, my amendment would preclude a foreclosure and bankruptcy that resulted from subprime and predatory lending from being included in the determination of a debtor's creditor score. Certainly, a debtor's declaration of foreclosure or bankruptcy has a deleterious effect on one's credit score.

This makes a bad situation, worse. If a debtor has poor credit to begin with and is forced to declare bankruptcy or is forced into foreclosure, this combination would make it almost impossible for a debtor to secure credit in the future. A lowered credit score results in a downward spiral for the debtor and ultimately leads to an economic quagmire for the debtor.

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My amendment would have prevented 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 have prevented 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.

The homeowners should not be required to pay for the bad acts of the lenders. It would take years for a homeowner to recover from a mortgage foreclosure. My amendment strengthens this already much needed and well thought out bill.

I am delighted that the Judiciary Committee has indicated that my language will be included in the Conference language. I look forward to having my staff work with the Committee to achieve this end.

There were four amendments that were made in order by the Rules Committee. I will address my support or non-support for each amendment.

CONYERS AMENDMENT

I support the Manager's Amendment offered by Chairman Conyers. The amendment makes sense and makes clear that H.R. 1106 is intended to help those that cannot afford to repay their mortgage without intervention. Indeed it is strength to the underlying bill by providing finality to the decisions worked out by the bankruptcy courts. These decisions would provide finality between lenders and borrowers. Moreover, the debtors are afforded certain protections by the Second Degree Amendment. The Second Degree Amendment provides that the lender could receive additional funding from the sale of the foreclosed home.

The Manager's Amendment would do the following:

(1) require courts to use FHA appraisal guidelines where the fair market value of a home is in dispute;

(2) deny relief to individuals who can afford to repay their mortgages without judicial mortgage modification; and

(3) extend the negotiation period from 15 to 30 days, requiring the debtor to certify that he or she contacted the lender, provided the lender with income, expense and debt statements, and that there was a process for the borrower and lender to seek to reach agreement on a qualified loan modification.

The Conyers Amendment would require a GAO study regarding the effectiveness of mortgage modifications outside of bankruptcy and judicial modifications, whether there should be a sunset, the impact of the amendment on bankruptcy courts, whether relief should be limited to certain types of homeowners. The GAO must analyze how bankruptcy judges restructure mortgages, including the number of judges disciplined as a result of actions taken to restore mortgages.

The Conyers Amendment would clarify that loan modifications, workout plans or other loss mitigation plans are eligible for the servicer safe harbor. Further, it would require HUD to receive public input before implementing certain FHA approval provisions.

With respect to the HOPE for Homeowners Program: recasts the prohibition against having committed fraud over the last 10 years from a freestanding prohibition to a borrower certification. The Conyers Amendment would amend the National Housing Act to broaden eligibility for Home Equity Conversion Mortgage (HECM) or ``reverse mortgage.''

Provides that the GAO must submit to Congress a review of the effects of the judicial modification program.

Requires the Comptroller of Currency, in coordination with the Director of Thrift Supervision, to submit reports to Congress on the volume of mortgage modifications and issue modification data collection and reporting requirements.

Expresses the Sense of Congress that the Treasury Secretary should use amounts made available under the Act to purchase mortgage revenue bonds for single-family housing.

Expresses the Sense of Congress that financial institutions should not foreclose on any principal homeowner until the loan modification programs included in H.R. 1106 and the President's foreclosure plan are implemented and deemed operational by the Treasury and HUD Secretaries.

Establishes a Justice Department Nationwide Mortgage Fraud Task Force to coordinate anti-mortgage fraud efforts. Would provide that the Treasury Secretary shall provide that the limit on the maximum original principal obligation of a mortgage that may be modified using EESA funds shall not be less than the dollar limit on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation that is in effect at the time the mortgage is modified.

PRICE, TOM AMENDMENT

I oppose the Price Amendment. The Price Amendment provides that if a homeowner who has had a mortgage modified in a bankruptcy proceeding sells the home at a profit, the lender can recapture the amount of principal lost in the modification.

I oppose the Price Amendment for the following reasons.

First, the Price amendment would make homeowners into renters for life. It will lead to poorly maintained homes and lower property values for all of us. It takes away any incentive for homeowners to maintain their homes or insist on competitive sale prices.

Second, the Manager's Amendment already allows lenders to get back a substantial portion of any amount a home appreciates after bankruptcy. But it leaves in place incentives for homeowners to maintain and improve homes.

Third, the Price Amendment is opposed by the Center for Responsible Lending, Consumers Union, Leadership Conference on Civil Rights, National Association of Consumer Advocates, National Association of Consumer Bankruptcy Attorneys, National Community Reinvestment Coalition, National Consumer Law Center, National Legal Aid and Defender Association, National Policy and Advocacy Council on Homelessness, and USPIRG.

For the foregoing reasons, I oppose the Price Amendment and I urge my colleagues to vote ``no'' on this amendment.

PETERS, GARY AMENDMENT

I support this amendment. This amendment is straightforward and is intended to help the borrower by providing a last clear chance to garner much needed information. It is my hope that this information would be used to provide financial assistance and education to the consumer.

In many cases, proper education about the use of credit and mortgages could have made all the difference in the consumers choices. Simply put, if the consumers made wise and informed credit decisions in the first instance, they might not have been in bankruptcy or facing foreclosure. I find this amendment incredibly prudent and helpful to debtors and consumers. I urge my colleagues to support this amendment.

TITUS AMENDMENT

The Titus Amendment would require a servicer that receives an incentive payment under the HOPE for homeowners to notify all mortgagors under mortgages they service who are ``at-risk homeowners'' (as such term is defined by the Secretary), in a form and manner as shall be prescribed by the Secretary, that they may be eligible for the HOPE for Homeowners Program and how to obtain information regarding the program.

The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes. The program is effective from October 1, 2008 to September 30, 2011.

HOW THE PROGRAM WORKS

There are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program:

1. Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program.

2. Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan.

3. Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners.

4. Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.

It is envisioned that the primary way homeowners will initially participate in this program is through the servicing lender on their existing mortgage. Servicers that do not have an underwriting component to their mortgage operations will partner with an FHA-approved lender that does.

Because I am committed to helping Americans obtain homes and remain in their homes, I support the HOPE for Homeowners Program and I support this amendment. I urge my colleagues to support this bill. Indeed, I feel personally vindicated that Congress has set aside $100 bill to address the issue of mortgage foreclosure, an issue that I have long championed in the 110th Congress.

All in all, the rule makes sense. The amendments that I support will make this bill much stronger and will benefit more Americans. I urge my colleagues to support the Conyers, Peters, and Titus Amendments.

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