WASHINGTON, DC – House Majority Leader Steny H. Hoyer (MD) spoke on the House Floor this afternoon in support of the American Housing Rescue and Foreclosure Prevention Act. Below are his remarks as prepared for delivery:
“Mr. Speaker, today, through this comprehensive, landmark legislation – the American Housing Rescue and Foreclosure Prevention Act – this House will take decisive action to keep hundreds of thousands of families at risk of foreclosure in their homes and will help stabilize housing markets across the nation that have been wracked by an unprecedented drop in home values over the last two years.
“Make no mistake: The slumping housing market has had negative, rippling effects throughout our economy. And thus, it is imperative that we take responsible, reasonable steps such as this to strengthen our weak economy, and ultimately benefit all of us.
“As Federal Reserve Chairman Ben Bernanke pointed out in a speech on Monday 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.’
“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.’
“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 the Mortgage Bankers Association. More than 1.2 million properties received foreclosure notices in 2007, up 75 percent from 2006. And, one in 33 homeowners is projected to be in foreclosure over the next two years.
“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.
“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 $2.7 billion over five years.
“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; 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, enabling veterans to have more homeownership opportunities.
“And, it includes FHA modernization provisions that have already passed the 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.
“I urge my colleagues on both sides of the aisle: Let’s mitigate the effect of the bursting of the housing bubble.
“Let’s prevent hundreds of thousands – and perhaps up to one million – foreclosures and allow American families to stay in their homes through this responsible legislation.
“Let’s stabilize our housing market; help millions and millions of homeowners not at risk of foreclosure retain – not lose – value in their homes; and strengthen our economy.
“Let’s pass this comprehensive, bipartisan legislation today, and work to get it to the President’s desk without delay.
“Vote ‘yes’ on the American Housing Rescue and Foreclosure Prevention Act of 2008.”