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Mr. SHERMAN. At best, we have a fragile recovery from a massive recession caused by a precipitous decline in home prices. Now, I know the gentleman is well-intentioned, but nothing is more likely to cause a double dip in this recession than the second precipitous drop in home prices that would be caused by pulling FHA and, as the gentleman argues, Fannie and Freddie out of the home lending market.
Right now, FHA is 30 percent of the home purchase finance market, about over half of that market for African Americans, 45 percent for Hispanics. Are we going to tell one-third of American home buyers, almost half or over half Hispanics and African Americans seeking to buy homes, that they are not going to be able to buy those homes? Because, if they can't get FHA financing, the private sector may be there, but at much higher rates. And there is no way that these individuals will be able to afford to buy those homes.
With fewer buyers, you will see a precipitous decline in prices. That devastates communities further, devastates the American economy further.
FHA is actuarially sound. It charges fees for the services and the guarantees that it provides. And to cut its role in the market by a third as part of an overall policy designed to take FHA, Fannie Mae, and Freddie Mac out of the market ignores the fact that, in these troubled times, those three entities--FHA, Fannie, and Freddie--account for almost all of the home mortgages obtained by middle-class and working families.
So we should defeat the gentleman's amendment. And I want to point out it is opposed by the National Association of Realtors, the National Association of Home Builders, and the Mortgage Bankers Association.
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Mr. SHERMAN. I yield myself the remainder of the time.
Mr. Chairman, I think the gentleman's definition of ``risk'' and his arithmetic are a bit faulty. To say that $1 billion of smaller loans carries less risk than $1 billion of larger loans is not something one can determine except by looking at the performance of those loans.
As the gentleman from California (Mr. Gary G. Miller) pointed out, those larger loans perform better. The FHA, therefore, has less insurance risk and, actually, usually, makes a profit on those loans. So to say that loans in Los Angeles take away from loans in Ohio and expose the Federal Government to more risk than loans in Ohio is simply false.
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Mr. SHERMAN. The gentleman is correct. This is not an anti-Ohio stance that the two gentlemen from California are taking.
The fact is there is this image that some have from other parts of the country that, if a home sells for more than $500,000, the people in it must be rich. That is not how things work in the 122 counties that are affected by this amendment. In my area, if a police officer is married to a teacher, they're in a home of over $500,000. Now, that's very difficult for them to afford. That ends up tying up their retirement money for better or for worse, but that is how expensive it is to live in some parts of this country.
To say that, because people are buying a home of over $500,000 that they are rich and do not deserve the same kind of help the gentleman from Ohio thinks middle class families in his district deserve, it is the same kind of help that middle class families in my district deserve.
Now, this amendment is opposed by the Mortgage Bankers Association, by the National Association of Home Builders and by the National Association of Realtors, not just the California divisions of those entities but entities that represent the entire country. I don't think that the Ohio Realtors would be here supporting this amendment. I don't think the Nebraska Realtors would be. And I don't think the National Association of Realtors would be here opposing this amendment if the amendment were going to help major swaths of this country.
The fact is that the FHA's current program helps California without hurting those other States. It helps the Washington area, the New York area, much of Virginia, et cetera. The worst thing we could do for this economy is to cause a precipitous decline in the price of homes in the major metropolitan areas of this country. Our recovery is fragile. The program, the way it works now, allows middle class families in both Los Angeles and in Ohio to be able to finance homes, and we ought to vote down this amendment.
So please join with Chairman Frank, with Chairwoman Waters, with the National Association of Realtors, Home Builders, and Mortgage Bankers in urging a ``no'' vote.