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Supporting Home Ownership and Responsible Lending

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Date:
Location: Washington, DC

SUPPORTING HOME OWNERSHIP AND RESPONSIBLE LENDING -- (House of Representatives - July 10, 2007)

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Mrs. BIGGERT. Mr. Speaker, I yield myself such time as I may consume.

I rise to support House Resolution 526, recognizing homeownership and responsible lending. As the ranking member of the House Committee on Financial Services Subcommittee on Housing and Community Opportunity, I want to thank the gentleman from Maryland, Representative Cummings, and Chairman Frank and Chairwoman Maloney for working in a cooperative fashion to ensure that the language protects borrowers while preserving access to homeownership opportunities.

Over the past several years, the housing market has helped to drive the national economy as Americans bought and refinanced homes in record numbers. The benefits of homeownership are undeniable. For this reason, there has been a significant focus on improving homeownership opportunities for everyone, including the low-income borrower. At the same time, the subprime market has flourished and provided credit to many families that may not have qualified under conventional standards.

Today, this country enjoys record-high homeownership rates. More than 68 million Americans own a home. Of this 68 million, 50 million homeowners have a mortgage, and 13 million of them have a subprime loan. According to a recent Chicago Tribune article, ``Subprime loans, often with adjustable rates, made homeownership possible for millions of Americans whose credit ratings or income levels made them ineligible for cheaper prime loans.''

However, of the 13 million subprime loans, roughly 5 percent of them are entering foreclosure. According to the data released by the Mortgage Bankers Association, these numbers are on the rise. These mortgage foreclosure rates raise eyebrows and call into question what actions are to be taken to help homeowners keep their homes, and I would like to emphasize the word ``action.'' While I believe that this resolution under consideration outlines many important facts, most of which Americans have seen printed in the news for months, it does not take action. The resolution tells the House something that we already have authority to do, and that is to take action.

Americans are waiting for the leadership of this House to exercise that authority. We can talk about the increase in foreclosure rates until we are blue in the face, and why is the leadership in this House waiting. The fact of the matter is, this body needs to join forces with the folks in the public and private sectors to take action immediately.

What it is we should be doing right now is to ensure that the 650,000 homeowners and others who may follow can keep their homes. First we can and should pass a Federal Housing Administration modernization bill. I introduced H.R. 1752, the Expanding American Homeownership Act of 2007, a bill identical to the one that passed the House last July by a strong bipartisan vote of 415-7.

However, on the same day, two of my colleagues on the other side of the aisle introduced another FHA reform bill that includes a new and controversial housing trust fund provision. This trust fund provision has stalled the bill. So while the other side of the aisle is holding out for a brand-new trust fund, millions of Americans may lose their homes in 2007 because they did not have the refinancing option that a modernized FHA could have offered them.

In testimony before the House Financial Services Committee, U.S. Department of Housing and Urban Development Assistant Secretary for Housing Brian D. Montgomery urged Congress to pass an FHA reform bill and said FHA could help hundreds of thousands of additional borrowers to secure a safe and affordable mortgage. He said that the best thing to help subprime borrowers is to reform FHA, and he added that HUD is prepared to immediately implement FHA reforms.

Second, this resolution mentions we can immediately increase opportunities for housing counseling. It also says that we should raise public awareness. I think that first by advertising available resources we can both raise public awareness and increase opportunities for housing counseling. It is crucial to promote financial literacy and educate our youth and adults. This is the most direct way of ensuring that consumers understand the terms of their loan so that they may avoid predatory loans and foreclosure altogether.

I am pleased that on June 25, Neighborhood Works America and the Ad Council launched a national ad campaign aimed at preventing home foreclosures. Homeowners in trouble can try to save their homes by calling a hotline, 888-995-HOPE, a number provided by the Homeowner Preservation Foundation.

In addition, we have about 2,300 HUD-certified housing counseling agencies across the country. Americans should know they can visit HUD's Web site or call 800-569-4287 to find a HUD-certified counselor in their neighborhood. HUD-certified counselors can give straightforward and free or low-cost advice to potential or existing homeowners about buying a home, refinancing a mortgage, or preventing foreclosure.

Third, we need to address the root problems resulting from predatory or bad subprime loans. The Federal regulators have recently stepped up to the plate and tried to address the increasing number of foreclosures through interagency guidance on subprime loans. The guidance to mortgage lenders focuses on loans in the subprime market, particularly adjustable rate mortgage products. It specifies that a lender's assessment or a consumer's ability to repay should be based on the fully indexed rate, assuming a fully amortized repayment schedule. The guidance also focuses on the need for clear and balanced communication to the borrower with regard to mortgage loan benefits.

I support these efforts, but there is much more to do. I know that the issue of mortgage fraud is hot in the Chicago area. We need to ensure that law enforcement has the necessary tools and resources to crack down on fraudulent activities.

Finally, I support this resolution because I agree with my colleagues on the importance of shedding some light on actions that Congress or Federal regulators can take to help homeowners enter into realistic and affordable loans in the future. As we consider our options to take action at the Federal level to help Americans keep and own their homes, I would urge my colleagues to carefully weigh the potential consequences of such actions.

We should allow secondary mortgage markets to adjust to the rise in foreclosures accordingly and to continue to supply liquidity to the primary mortgage market. Simultaneously, we should take immediate action. We need to pass FHA modernization now, and we need to ensure that people continue to have immediate access to financial education and counseling, credit, and viable mortgage options so that people in future generations can realize the American Dream of homeownership.

Again, I thank the gentleman from Maryland (Mr. Cummings) for his hard work on this resolution.

Mr. Speaker, I reserve the balance of my time.

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Mrs. BIGGERT. Mr. Speaker, I have no further requests for time but would just ask one question of the chairman.

I think this is so important, and you mentioned that the FHA bill will be coming up. I was curious as to when we would be considering a subprime bill?

Mr. FRANK of Massachusetts. Mr. Speaker, will the gentlewoman yield?

Mrs. BIGGERT. I yield to the gentleman from Massachusetts.

Mr. FRANK of Massachusetts. In the fall. As the gentlewoman knows, this period is appropriations period, except for the voucher bill where we had gotten in line.

But I would hope that we can work in committee on the subprime. I would note, by the way, that 2 years ago, the current ranking member of the full committee was the chairman of the Subcommittee on Financial Institutions, and he was pretty far along in conversations with my two colleagues from North Carolina, Mr. Watt and Mr. Miller. And frankly, I think if we had not been interfered with from above, we might have gotten a bill a couple of years ago, I think we can pick up where we left off. I am optimistic we can do a bill this fall.

Mrs. BIGGERT. Mr. Speaker, I thank the gentleman, and I thank the gentleman from Maryland (Mr. Cummings) for bringing this resolution forward and outlining the important facts that will enable and make certain that people can keep their homes.

Mr. Speaker, I yield back the balance of my time.

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