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FHA Refinance Program Termination Act

By:
Date:
Location: Washington, DC

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Mr. LYNCH. 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.

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