Expanding American Homeownership Act of 2007
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Mr. CARDOZA. Madam Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 2 offered by Mr. Cardoza:
Strike line 19 on page 4 and all that follows through page 5, line 22, and insert the following:
SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.
Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) is amended by striking subparagraph (A) and inserting the following new subparagraph:
``(A) not to exceed the lesser of--
``(i) in the case of a 1-family residence, 125 percent of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation in effect for 2007 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation in effect for 2007 under such section for a 1-family residence; or
``(ii) 175 percent of the dollar amount limitation in effect for 2007 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitations with respect to properties located in Alaska, Guam, Hawaii, or the Virgin Islands), except that each such maximum dollar amount shall be adjusted effective January 1 of each year beginning with 2008, by adding to or subtracting from each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase or decrease, during the most recently completed 12-month or 4-quarter period ending before the time of determining such annual adjustment, in an housing price index developed or selected by the Secretary for purposes of adjustments under this clause;
except that the dollar amount limitation in effect under this subparagraph for any size residence for any area may not be less than the greater of (I) the dollar amount limitation in effect under this section for the area on October 21, 1998, or (II) 65 percent of the dollar amount limitation in effect for 2007 under such section 305(a)(2) for a residence of the applicable size, as such limitation is adjusted by any subsequent percentage adjustments determined under clause (ii) of this subparagraph; and except that, if the Secretary determines that market conditions warrant such an increase, the Secretary may, for such period as the Secretary considers appropriate, increase the maximum dollar amount limitation determined pursuant to the preceding provisions of this subparagraph with respect to any particular size or sizes of residences, or with respect to residences located in any particular area or areas, to an amount that does not exceed the maximum dollar amount then otherwise in effect pursuant to the preceding provisions of this subparagraph for such size residence, or for such area (if applicable), by not more than $100,000; and''.
The CHAIRMAN. Pursuant to House Resolution 650, the gentleman from California (Mr. Cardoza) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from California.
Mr. CARDOZA. Madam Chairman, I yield myself 2 1/2 minutes.
I rise in support of this amendment, Madam Chairman. And I wish to begin by thanking Chairman Frank for bringing this much-needed legislation to the floor, and for all his efforts to help the reeling housing industry in my area, and the country in general.
As we have heard from countless media reports, we are facing a growing mortgage crisis. Sadly, I represent an area that is particularly hard hit by this crisis. The community of Stockton has acquired the distinction of having the highest foreclosure rate of any U.S. city in the country, and there one in 20 households are in jeopardy of foreclosure at this time. In fact, Stockton has had 8,000 foreclosures so far in 2007.
This morning, the Modesto Bee reported that central California and central valley homeowners were six times more likely to be in mortgage default for last year than the national average. In addition, home values have plunged 15 to 20 percent so far this year.
This amendment will address this problem and help ameliorate the harsh effects of the credit crunch. First, the amendment raises the FHA loan limit to the lower of, A, 125 percent of the local median home price or, B, 175 percent of the national GSE conforming loan limit.
The biggest impact of this will be to make FHA loans available in low- and moderately income priced home markets. By raising the local loan limit up to 125 percent of the local median home price, FHA will be able to serve currently neglected populations and ensure loans in this vast and middle-market area. In addition, the amendment will have the effect of serving high-cost areas as well. By raising this artificial cap to 175 percent of the GSE conforming loan limit, the amendment will allow FHA to serve high-cost areas.
California has some of the highest priced real estate anywhere in the country. This amendment, by expanding FHA's reach to high-priced areas, will finally bring the benefits of FHA to millions of deserving Californians.
In addition, there are other areas of the country where this will have a monumental impact. Massachusetts, New York, Connecticut and other areas are all high-cost areas and will benefit tremendously from raising the loan limit. Raising loan limits and enhancing the ability of FHA to serve currently neglected populations will have the effect of generating more liquidity
in the market and enhancing lender confidence. This will enable more borrowers who are facing loan resets to refinance their mortgages on more favorable terms.
This amendment has strong support of the National Association of Realtors, the National Association of Home Builders, and others on the front lines of the housing industry. They know the needs of this industry, and they know that this bill will help.
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