New Direction for Energy Independence, National Security, and Consumer Protection Act and the Renewable Energy and Energy Conservation Tax Act of 2007

Floor Speech

NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007 -- (Senate - April 10, 2008)

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Mr. AKAKA. Mr. President, I support the Foreclosure Prevention Act of 2008. I thank Chairman Dodd and Ranking Member Shelby for their work to develop a meaningful bill to help address the housing crisis in our country. Too many working families are losing their homes, credit access has been significantly reduced, and our economy has slowed. This act will help alleviate the challenges faced by homeowners.

Hawaii's foreclosure rate increased by more than 88 percent last year, for a total of 1,270 families who had their homes foreclosed. The loss of a family home can be financially and emotionally devastating. Compared with other States, Hawaii has not suffered as much during this housing crisis. However, foreclosure statistics do not reflect the many families who are having difficulties making mortgage payments after their adjustable interest rate mortgage reset or having to sell at a significant loss due to an unexpected transfer or a loss of a job.

This much needed bipartisan legislation will help protect homeowners across the country, prevent foreclosures, and assist our Nation's veterans. This legislation will modernize and improve the Federal Housing Administration, FHA, to provide homeowners with additional access to fixed rate mortgages. Additional resources will be provided by this bill for housing counseling to assist homeowners in finding solutions to their difficult situations. In addition, mortgage disclosures will be made more meaningful to consumers by this bill.

I also appreciate the inclusion of a provision that is derived from legislation that I introduced last month, S. 2768. That legislation would correct an oversight in the Economic Stimulus Act and extend the temporary home loan guaranty increase to veterans so that more of them can realize the dream of home ownership.

The VA Home Loan Guaranty was part of the original GI bill in 1944. It was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home loan with no down payment. So as World War II was ending, landmark legislation made the dream of home ownership a reality for millions of returning veterans. Today, more than 25 million veterans and servicemembers are eligible for VA home loan guarantees.

The amount of the home loan guaranty was last adjusted by the Veterans Benefits Act of 2004. The maximum guaranty amount was increased to 25 percent of the Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, as adjusted for the year involved. Using that formula, since the Freddie Mac conforming loan limit for a single family residence in 2008 is $417,000, VA will guarantee a veteran's loan up to $104,250, or 25 percent of the Freddie Mac limit. This guaranty exempts homeowners from having to make a down payment or secure private mortgage insurance.

The newly enacted Economic Stimulus Act of 2008, however, temporarily reset the Fannie Mae, Freddie Mac, and FHA home loan guarantee limits to 125 percent of metropolitan-area median home prices, without reference to the VA home loan program. This had the effect of raising the Fannie Mae and Freddie Mac limits to nearly $730,000 in the highest cost areas, while leaving the VA limit of $417,000 in place.

I urge all of my colleagues to support this measure so that this important group of Americans may benefit from an increased home loan guaranty in this time of economic uncertainty.

This legislation would also increase benefits for specially adapted housing for disabled veterans. This legislation would authorize VA to pay an additional $10,000 to those eligible for assistance pursuant to section 2101(a), title 38, United States Code, increasing the total amount of funds available per grant to $60,000. Individuals eligible for assistance pursuant to section 2101(b) would be able to receive an additional $2,000 in assistance, increasing the total amount of funds available per grant to $12,000.

Increases in housing and home adaptation grants have been infrequent, despite the fact that real estate and construction costs are continually on the
rise. Unless the amounts of the grants are adjusted, inflation erodes the value and effectiveness of these benefits, making it more difficult for beneficiaries to afford the accommodations they need. This provision would go a long way in making certain that specially adapted housing benefits meet the current needs of America's veterans.

We must enact this legislation quickly to help homeowners remain in their homes, stabilize the economy, and provide much needed improvements to veterans' housing benefits.

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