Statement by Sen. Bachus on Senate amendments to HR 3221, American Housing Rescue and Foreclosure Prevention Act of 2008 MortgagePress.comSen. Spencer Bachus, U.S. Senate, HR 3221, American Housing Rescue and Foreclosure Prevention Act of 2008
Mr. Speaker, I rise in strong opposition to this Democrat
omnibus housing bill, which comes to the floor today under a rule
that allows for no Republican amendments or input.
Let me acknowledge at the outset that Chairman Frank has
included in the Financial Services Committee portion of this
package several measures that have previously passed the House and
that I support. For example, legislation to modernize the Federal
Housing Administration (FHA) is long overdue, and will, if enacted,
do more to address the problems in the housing market than anything
else in this bill.
But despite the inclusion of this and several other constructive
provisions, I must oppose the overall package because it creates a
new $300 billion government subsidy that I believe is fundamentally
unfair and will likely do more harm than good.
Mr. Speaker, I am not here to minimize the seriousness of the
financial distress that that many of our citizens are experiencing
as a result of the bursting of the housing bubble that we have seen
over the past two years. An economist at Moodys Economy.com
(independent of Moodys) says 8.8 million are underwater, and
Barclays has estimated that half of 2006/2007 subprime loans are in
or close to a negative equity position.
The vast majority of Americans who find themselves behind in
their mortgage payments as a result of ill-advised financial
decisions or misjudgments are good and decent people. The good news
is that many of these over-extended homeowners are already
receiving assistance under private sector initiatives like the HOPE
NOW alliance, which since July 2007 has provided workouts to nearly
1.4 million homeowners seeking to stay in their homes, and the Bush
Administrations FHA Secure program, which has helped almost 180,000
families refinance their mortgages.
Before we create a massive new government program and put
billions of taxpayer dollars at risk, we need to think long and
hard about whether our actions are fair to the many millions of
Americans who planned carefully and made sacrifices to meet their
financial obligations. There are currently 51 million homeowner
families and 34 million renter families making their payments
on-time every month. There are an additional 25 million families
who have paid their mortgages in full, or who never had a mortgage.
Asking these 110 million hard working families to pick up the cost
of a bailout of the lenders and securitizers who helped create the
housing crisis offends many Americans sense of fair play, and for
good reason.
Lenders and securitizers wanted no part of government regulation
or interference when housing prices were soaring and they were
making extraordinary profits. Now that the loans they eagerly made
are going bad, this bill offers a mechanism to offload their
problem loans onto the American taxpayers. That's unfair and
wrong.
Proponents of the legislation point to the haircut that
investors must take in order to participate in the program to argue
that nobody is being bailed out. In fact, the "haircut" makes it
certain that the plan will function as a bail-out. Because
participation in the plan is voluntary, no investor will part with
a mortgage if they think it has a reasonable chance of performing.
The incentives are designed to ensure that the taxpayer loses:
Investors will place the mortgages they think are worth less than
the "haircut" into the program, to be refinanced with an
FHA-guaranteed loan. Given the substantial risk that these loans
represent, no lender would refinance them without an FHA guarantee.
The result is that taxpayers who acted responsibly during the
run-up in housing prices are left to bear the costs of cleaning up
after irresponsible lenders, investors, and speculators.
For all of these reasons, I must oppose this housing package,
and again express my disappointment that Republicans have been
denied any opportunity to address the bill's many deficiencies
through the amendment process.
