Providing for Consideration of H.R. 5072, FHA Reform Act of 2010

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Ms. JACKSON LEE of Texas. My good friend is absolutely right. We're here today to talk about the reform of FHA and to really give relief to the borrowers who will have the ability to see the current cap on mortgage insurance premiums increase and generally give opportunity for Americans to make whole and make good on the home buyers market to get back into the market.

The sub-prime debacle, the whole foreclosure devastation, tragedy happened on the last administration's clock, the Republican administration's clock. So I wonder now when we stand here to try to help new home buyers get into the market, work with the real estate industry, and make people whole, there seems to be an opposition.

The whole GSE reform was something that could have been done under the last administration's clock, but they wanted to take a sledge hammer and axe and destroy the opportunity for individuals to be able to access the kind of moneys and resources so you could get into a home.

I support this legislation, H.R. 5072, the FHA Reform Act, because what it will do is to give Americans back their wealth again, allow them to buy homes, give them the insurance premiums that they need, and to get us back on track. This is the right direction. Let's keep going forward to help America stay strong.

Mr. Speaker, I rise in strong support of H.R. 5072--``FHA Reform Act of 2010''. The Chair of the Financial Services Committee, BARNEY FRANK, Chairwoman MAXINE WATERS of the Subcommittee on Housing and Community Opportunity, and the co-sponsors of this bill must be applauded for moving this important legislation to the floor. This legislation amends the National Housing Act to authorize the Secretary of Housing and Urban Development, HUD, to increase the maximum annual premium payments for mortgage insurance, and makes the charging of the premiums discretionary instead of mandatory.

The Federal Housing Administration, FHA, has its origins in the post-depression era. However, in the last several years, FHA has been a major force in breathing life into the depressed housing market. With 51 percent of African Americans homebuyers and 45 percent of Hispanic families who purchased homes in 2008, using FHA financing, FHA is far and away the leader in helping minorities purchase and maintain their homes.

Subprime mortgage loans, which were at the heart of the housing crisis, were disproportionately made to blacks and other minorities. For example, Wells Fargo loan officers described the high interest rate mortgages targeted at Black homeowners as ``ghetto loans,'' an unacceptable and terribly offensive reference. As a result, a disproportionate number of blacks and minorities have been forced into foreclosure. In predominantly Black neighborhoods, 1 in every 8 loans dispersed by the large lender, Wells Fargo, resulted in foreclosure, while in predominantly White neighborhoods, only 1 of every 59 Wells Fargo loans resulted in foreclosure.

With the increase in foreclosures, foreclosure rescue and loan modification scams have been on the rise. The Internet has been flooded with schemes by fraudulent organizations and individuals who are charging fees for counseling services, a service that HUD provides free of charge. Some of these scams go as far as to require homeowners to sign over or transfer the deeds to their homes, and many are simply absconding with the mortgage payments that homeowners are struggling to make.

Something must be done to protect these hard working Americans, who are already facing financial distress and the potential loss of their home, from these predatory schemes. The Home Affordable Modification Program (HAMP) was implemented just over a year ago to aide homeowners in modifying their loans as opposed to turning to these fraudulent schemes. Unfortunately, the program has been unable to keep pace with the quickening pace of foreclosures.

In 2010, over 40 years since the Federal Housing Administration was established, FHA is playing an increasingly important role in stabilizing economically disadvantaged communities, while providing assistance to families across a wide-range of incomes. As John Taylor testified before the Financial Services Subcommittee Housing and Community Opportunity, ``research by Dan Immergluck shows that FHA lending is more likely in communities experiencing high unemployment, smaller metropolitan areas, metropolitan areas experiencing large home price declines, and Zip codes with lower median home values. In other words, FHA lending has increased while conventional lending has decreased in communities hardest hit by the current severe recession.''

Despite this, more must be done to protect home owners and enable prospective homebuyers. This reform bill is a vital step toward that end. Section 4 of this legislation authorizes the Secretary of Housing and Urban Development to terminate approval of a mortgagee to originate or underwrite single family mortgages if the mortgagee's rate of early defaults and claims is excessive. This will help to reverse the damage caused by predatory lending, and help families keep their homes. This will have a ripple effect throughout countless cities because entire neighborhoods are currently at risk of being abandoned due to foreclosures. Saving these neighborhoods will keep communities intact, and will preserve neighborhoods for revitalization that is vital to the nation's economic recovery efforts.

Section 14 of this legislation authorizes the Secretary of Housing and Urban Development to reimburse servicers of HUD-insured residential mortgages for the costs of obtaining the services of specified independent third parties, including a HUD-approved housing counseling agency, to make in-person contact, at no charge, with mortgagors whose payments are 60 or more days past due, solely to provide information regarding: (1) HUD-approved housing counseling agencies; and (2) mortgage loan modification, refinance, and assistance programs. During these trying economic times, this HUD-approved counseling must be a vital tool for families at risk of defaulting on their mortgagees, as they decide on the best financial course of action at no cost to them.

It is my hope that this legislation will help to enable these disadvantaged groups, as well as struggling homeowners to retain their homes if they own one, or to buy homes for the first time if they do not. As Graciela Aponte of the National Council of La Raza testified before the Financial Services Subcommittee on Housing and Community Opportunity, ``communities of color, low-income families, and first time homebuyers--FHA's target market--have been disproportionally impacted by the toxic subprime mortgages on the housing market.''

Thank you, Mr. Speaker. Once again, I strongly urge my colleagues to join me in supporting the FHA Reform Act of 2010, H.R. 5072. Legislation this important to the American homeowner and to our economy must be passed immediately.

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