Foreclosure Prevention Act of 2008

Floor Speech

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Mr. HOYER. I thank the gentleman for yielding.

This is not about petting dogs. This is about people who are hurting. This is trying to reach out to people who have been savaged in many ways by this economy and the policies that have led to an economy where average working incomes are down $1,000 and where gasoline prices have exploded over 200 percent from $1.46 to $3.56. I would remind you that under the Clinton administration they went from $1.06 to $1.46, 5 cents a year during the 8 years of the Clinton administration. They are going up 5 cents a week during this administration.

People are stretched.

I didn't hear people come to this floor and say $30 billion for Bear Stearns. It was outrageous, putting the taxpayers' money--Mr. Flake says he did. Thirty billion dollars. We just talked about $2.5 billion for literally tens of thousands, hundreds of thousands, perhaps as many as 1 million people. There is a crisis, and they have asked us to respond.

I want to congratulate the chairman of our committee. I want to thank the ranking member of the committee. I want to thank all the members of the committee for giving this their attention and trying to come up with a solution that works. Was this a partisan, divisive solution? Absolutely not. The Secretary of the Treasury has said that this is a product that merits serious consideration.

For a time, I thought he was for it. I am not sure now. There seems to be some internal division within the administration. Mr. Bernanke, the head of the Federal Reserve, former chairman of the Council of Economic Advisers, said that this is a good thing to do.

So, Mr. Speaker, today through this comprehensive landmark legislation, the American Housing Rescue and Foreclosure Prevention Act, this House is going to act not to pet dogs but to help people. This House will take decisive action to keep hundreds of thousands of families at risk of foreclosure in their homes and will help stabilize the housing markets across the Nation that have been wracked by an unprecedented drop in home values over the last 2 years.

Make no mistake: The slumping housing market has had negative, rippling effects throughout our economy. It is not just people in houses that are having problems, but the subprime crisis has affected our entire country and the availability of credit. And thus it is imperative that we take responsible, reasonable steps such as this to strengthen our weak economy and ultimately benefit not just those who are at risk of losing their homes, but every American.

As Federal Reserve Chairman Ben Bernanke pointed out in a speech on Monday, Monday, just a few days ago, at Columbia University, ``High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy.''

And the answer is, don't pet your dog. It was bad behavior. Leave him alone. Or punish him. What we want to do is help people do the right thing.

He continued: ``Therefore, doing what we can to avoid preventable foreclosures is not just in the interests of lenders and borrowers, it's in everybody's interest.'' Those are Bernanke's words. Not Chairman Frank's. Not mine.

Mr. Speaker, that is precisely what this legislation, the product of hard work by Chairman Barney Frank and so many others, is designed to do: Avoid preventable foreclosures.

There is little question that after an historic housing boom in the first half of this decade we now are faced with a housing crisis. Foreclosures soared to an all-time high in the last quarter of 2007. According to Mortgage Bankers Association, more than 1.2 million properties received foreclosure notices in 2007, up 75 percent from 2006. And 1 in 33 homeowners is projected to be in foreclosure over the next 2 years. So much for a great economy.

This legislation, in short, will expand the FHA program so that borrowers in danger of losing their homes can refinance into lower-cost, government-insured mortgages that they can afford to repay.

I've heard so much talk about a family-friendly Congress. Family values. Caring about children. What can be more family friendly than keeping families in their homes? I think not too many things.

But to be clear, this bill will minimize taxpayer exposure. In fact, the Congressional Budget Office estimates that the cost of putting homeowners into affordable loans under the bill would be not $30 billion, not $20 billion, not $10 billion, but a total of $2.7 billion. A few days in Iraq. A few days in Iraq. Not a month. A few days in Iraq.

Contrary to the rhetoric coming from some, this bill is not a bailout for irresponsible lenders or borrowers. Only primary residences are eligible. Investors and lenders must take significant losses, as they should. The owner of the old mortgage can only receive 85 percent of the current value of the home.

And in return for an FHA guarantee on the mortgage, borrowers must share with the government any profit from the resale of a refinanced home. The government will only have liability if the borrower defaults and the amount recovered in foreclosure is below the outstanding debt still owed.

Furthermore, this legislation includes tax provisions to expand refinancing opportunities and to spur home buying.

It increases the VA home loan limit for high-cost housing areas, which we passed before, enabling veterans to have more homeownership opportunities. We are having people come home from Iraq. We are going to be talking about that. They may have lost their home because they went to Iraq and they couldn't keep their home. This helps them get back in a home.

And it includes FHA modernization provisions that have already passed this House, as well as GSE reforms such as strengthening the regulation of Fannie Mae and Freddie Mac and raising their loan limits to increase liquidity in the mortgage market.

Chairman Frank has talked to Secretary Paulson about that. I have talked to Secretary Paulson about that. I am sure many of you on your side of the aisle have talked to Secretary Paulson about that. He thinks this is absolutely essential.

I urge my colleagues on both sides of the aisle, let's mitigate the effects of the bursting of the housing bubble. Let's prevent hundreds of thousands, and perhaps up to 1 million people, from foreclosure and allow American families to stay in their homes through this responsible legislation.

Let's stabilize our housing market and help millions and millions of homeowners who are not at risk of foreclosure, but whose neighbors are at risk for foreclosure, and if they are foreclosed upon, will see their home values deteriorate. So the assistance is not just to those at risk of foreclosure, but to all those who are in communities where homes are at risk.

Let's pass this comprehensive, bipartisan legislation today and work to get it to the President's desk without delay. I am hopeful that the President will see fit to sign it. Vote ``yes.'' Vote ``yes'' on the American Housing Rescue and Foreclosure Prevention Act of 2008. Vote ``yes'' for the families of America.

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