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Hearing of the Subcommittee on Housing and Community and Opportunity of the House Committee on Financial Services - H.R. 5679, The Foreclosure Prevention and Sound Mortgage Servicing Act of 2008


Location: Washington, DC


REP. MEL WATT (D-NC): Thank you, Madam Chair. I won't take two minutes. I just want to thank the Chair for allowing me to sit in on the hearing, the luck of the draw on our subcommittee assignments didn't allow me to get on the housing subcommittee.

But what I have been doing, I am not on the Capital Markets Subcommittee either, but yesterday I attended a Capital Markets Subcommittee hearing and I am here this morning, because I want to hear every idea that's out there to try to address this crisis that we are in, and try to get us out of it, and try to save homes in my congressional district, and particularly homes in vulnerable communities.

And while we've seen some progress we certainly haven't seen the kind of progress that we need to see. And I think the chairlady's bill will push further in the direction that kind of impels all of the players to play a role in solving this crisis and anything we can do to do that I think is advantageous.

I thank the gentlelady for allowing me to be here. I won't try to ask questions, but I did want to hear the testimony of some of the witnesses, and I thank you. Yield back, thank you.

REP. WATERS: Well, thank you very much, and since I must follow procedures I will ask unanimous consent to allow Mr. Watt to participate in today's hearing without objection, certainly, since such is the order.

Also Mr. Watt, I want you to know that I thought I heard you voluntarily removed yourself from my housing subcommittee, and I take that personally.


REP. WATERS: However, I did sign up for your committee on oversight and investigation.

REP. WATT: If the gentlelady will yield I'll go out of my way to explain this.

REP. WATERS: -- so he can defend himself.

REP. WATT: I'll defend myself. I think it was either me get off the committee -- subcommittee or go to another hour of re-bidding the whole process, and I figured I would come and participate in your subcommittee as often as I could anyway. So you know I am your supporter, and I'll be here trying to protest you back even when some of your committee members may not show up.


REP. WATT: Thank you, Madam Chair.

Ms. Maggiano, you know Representative Green used to be a judge, and I love the precision of his questions. But Representative Cleaver earlier stated that witnesses that come over here must take a lesson at answer avoidance, and perhaps the most adept at doing that are the folks from HUD.

Even with the precision of Representative Green's questions you managed to miss a category. You've got FHA and VHA -- VA loans. You've got conforming loans that the GSEs back. Both of those -- all of those categories have some form of mitigation arrangement.

And most of them, at least the VA and FHA, have some specific guidelines to get the loan. Most of the GSE conforming loans have some specific guidelines. You got to document income. You got to do all the things.

And then you've got a third category which is the one that you missed, which is the non-conforming loans that's not VA, not FHA, not GSE-backed at all. And those are the ones that have the highest rates of default in this crisis, isn't that right?


REP. WATT: And they are the ones that have the least amount of obligation to mitigate in this market, isn't that correct?

MS. MAGGIANO: I can't speak to their obligation --

REP. WATT: Well, you know that they are not under the FHA's mitigation standards, and you know they are not under the GSE mitigation standards. And we know that the loans were written outside the -- substantially outside any regulatory framework.

They are the most risky loans, and yet they have the least amount of obligation to mitigate. And that's the circumstance that we are in.

So I guess the question I'm asking is under those circumstances, if you assume all of that to be the case, and it's okay for you to assume that because it's true.


REP. WATT: Would a reasonable approach to be -- be to apply this -- some standards of mitigation perhaps the ones in this bill, perhaps the ones that FHA applies, perhaps the ones that the GSEs apply, to those -- that third category of people that have no obligation to mitigate.

Would that be a reasonable approach you think?


REP. WATT: Okay, all right.

With that, Madame Chair, I'm happy to yield back to the chair.


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