us seventy two a the agreement made and entered into on september twenty fourth two thousand and seven by and between the committee on financial services at the u s house of representatives and nancy alexander and amended on  act of two thousand and eight and as i called up let me say one of the less sensible aspects of this city is the rumor mill the democratic leadership people were besieged yesterday and today with a particularly stupid rumor that we had somehow planned to kill this bill and i would just want to express to those who spread the rumor  utter disrespect and my suggestion that the next time before they make a lot of extra work for people who already got constructive things to do pick up the phone and find things out which is that thank you very much mr chairman i thank you for moving this bill quickly to markup because there is such a pressing need for the economic stimulus that would be provided by the fifteen billion in grants and loans that this bill directs to state or local governments to help them transform the foreclosed and abandoned properties that threaten their economies into a new supply of affordable quality housing stock for owner occupied purchase and rental to understand or to need for this assistance one need only as i have business communities like cleveland detroit or the same bernadino in stockton metropolitan areas in california where block after block is dotted by foreclosed properties many of them suffering from neglect or actual bad handler's m b's abandoned and foreclosed properties drag down the value of the homes still occupied by working families and contribute to a cascade effect thereby plummeting home prices erode the tax base of state and local governments and cause real estate related industries such as the construction industry trade to supper as this committee heard from the panel of mayors and governors maoi who testified at our a party and meeting despite severe fiscal constraints many states and cities are already dedicating their own shrinking tax revenues to purchase foreclosed properties and stabilize neighborhoods but they are simply overwhelmed by the scale of the problem for this reason the national governors association has called specifically for a one time federal funding commitment to support the acquisition and rehab for foreclosed properties a two hour fifty eight eighteen is a sound approach to delivering this assistance particularly as improved by some of the measures in the amendment that you and i will offer shortly mr chairman i will just briefly highlight some of the key elements of the bill first it targets the communities and populations hardest hit by the foreclosure crisis and then the was introduced funds are allocated to states based on the state's percentage of nationwide foreclosures over the last year adjusted to account for the state relative medium home price the goal is to put the money where the problem is and to ensure that all states will be able to help approximately the same number of poor clothes and abandoned properties with her concerns about our initial approach and i think we will have a productive discussion here today around amendments that seat seek to strike a fair balance between the needs of large and high cost states and states and localities but especially high poor closure rates the bill also takes into account the impact of the crisis across the income spectrum from the moderate income to the extreme poor homes purchased for resale must be sold to families have been in that do not exceed one hundred forty percent of area median income properties purchased for rental must serve families have an income to add are below area median income and at least half of the seven point five billion and grant money authorized by the legislation must be targeted to house families below fifty percent of area meet medium defined by hood as very low income and happened this amount must hard target families at or below thirty percent of area median income defined by what is extremely low income this is where the need for portable housing is greatest as eleven point two million barry and extremely low income homeowners nationwide base foreclosure and poor renters find themselves an increase competition one already an adequate supply of affordable housing with slightly higher income households who have already been foreclosed upon second h r fifty eight eighteen distribute to state or local government position to address the problem quickly and comprehensively better all assistance must be distributed to state and local governments with a proven capacity to plan for and address large scale problems for this reason if amended as we proposed today h r fifty eight eighteen will distribute funds to the nation's largest one hundred cities largest fifty counties and to state for all remaining areas these entities have the capacity to meet the bills deadline of submitting conference a plan to herd within thirty days of an achmet we have more information that will be discussed as we move forward with these amendments today and i'll you're back the balance of my time the gentleman from alabama learned for the stabilising them the multitude of communities across our nation that are dealing with an elevated level of foreclosures and to some of these communities it is really sobering prime lending industry has had on these communities having said that i believe that the fifty eight eighteen is the wrong approach and has potential to do perhaps as much harm as good program where the money's coming from and i think that's something that we all give us all pause you know our constituents are being squeezed by high gas prices h food prices and to start another new federal program and try to find a way to pay for one of the the budget as we all know is in deficit is a real concern in my second problem with the legislation is that the ultimate beneficiaries and this this is the key to me other than the cost and how do we pay for that cost the ultimate beneficiaries i believe are not going to be the homeowners they're going to be lost or property or could lose their property but it will be the lenders the investors the speculators who own the vacant and foreclosed properties and it is commissioner brian montgomery stated in his testimony before this committee on this legislation it may have the unintended consequence of making foreclosure a more attractive option for lenders and thereby and that the end is but i'll take it from there and say they're back compounds the very problem of rising foreclosures that the bill ports to address that actually accelerating the number of foreclosures making foreclosure more attractive option i'm not sure we ought to be incentivizing foreclosure we ought to be encouraging these properties lenders to work and the speculators to work and the investor to cost it is true this will cost the federal government something if you look at the country as a whole i think it saves money cities being badly hurt and this is the only vehicle proposed to go to the aid of the cities and counties foreclosed property represents a one hundred eighty degree switch properties that were paying property taxes to cities tends to deal with that and i would also add if this was enough money to buy up all the foreclosed property that could possibly come forward it would have an incentive izing effect in fact it's not nearly enough to do that so i do not think it will anyone who does not now have a focal you contemplate foreclosure because he thinks the city will buy with this once a very serious risk that the money will be gone before that happens particular if we add up the members of gen california which is actually in the amendment that the general californian are going to going to correct myself he did not want to offer it separately but having incorporated it says that no property is eligible under this program until it's been in f for housing and other public purposes and i do think we got a letter i would note from the democratic and republican chair and vice chair of the governor's association economic development committee the governor michigan the governor of south dakota urging us to pass this bill we heard in the mayors we have the people who are supposed to be providing services hurting from this and this is an effort to respond to them the gentleman west and we're making judgments not really knowing sometimes you know i was simply let me say this so how michigan  you go through those towns and know how in michigan and you see the foreclosures and you see the devastating result so i will say that in my mind there are republicans that will support this legislation i'm not questioning  issue i do have some serious reservations about the legislation is under consideration today and i understand the concerns aptly expressed by chairwoman waters and share her desire to stabilize communities and we did hear this in testimony suffering from fault falling home values and increased foreclosures however i do not believe this approach will achieve our goal of helping families individual families remain in their home and truly stabilize communities rather this proposal could have an adverse effect of encouraging lenders to move towards foreclosure so they can move these bad loans off their books and have the taxpayers cover the cost the principal beneficiaries of this type of plan would be private lenders who are now the owners of the vacant and foreclosed properties instead of struggling homeowners who are working hard to stay in their the problem facing the housing sector next is an excess of supply or demand among other problems legislation like this may only serve to prolong our current housing problems in the housing market bailing out lenders or to subsidize irresponsible borrowing and lending at the expense of hardworking people who have played by the rules the goal of any federal response to the troubles in the housing market should be to work with the private sector to help homeowners maintain their homes not bailing out the lenders who sold bad loans or speculators who knowingly took a financial risk that is not produce the desired result at this point i cannot support this legislation for these reasons yield back the balance of my time the gentleman in texas for a brief statement thank you vision chairman you know i think one of the things we have to stop and reflect on here is is not just this year and last year but over the history of mortgages we've had people that have taken on the obligation that they ended up not being able to meet in so what we're talking about is not a new phenomenon of people unfortunately losing their homes what we've been talking about is an increased number of folks that have either gotten into a loan they should have gotten into unfortunate circumstances happened and so now they face the problem of being delinquent impossible for closure the problem i have with a lot of the proposals that we've been looking at is that we're trying to pick through that and pick who are the most worthy people for the federal government to step in and to give them special dip and dispensation over people that over the years of face the same circumstances the problem i see today is that if we begin to let the normal market process work through this as it's done over the years that this problem will eventually find a normal level of and that we will take a lot of these properties they will be purchased they will be rehabbed through the private sector one of the things i think we have to be very clear though is i've been in my district is that the people in america that are making their mortgage payments that are maybe working two jobs to keep that house used up their savings because one of their spouses has lost a job or something do not want the responsibility of also making their neighbor's house payment and what how do we make them pay their neighbors obligate american taxpayers for subsidies subsidizing folks that have been should get special dispensation and at the same time asking a neighbor to make another neighbor's house payment and with that i yield back the gentleman california is now recognize you have an amendment thank you very much this is chairman members as you know putting together a comprehensive legislation to deal with such a massive problem is not easy but we have tried to listen to all of those who had  for us the suggestions and basically call out those suggestions that we thought would make the bill a stronger bill we were particularly concerned about the boy because we wanted to make sure that  those most populous cities and counties were able to get bonding direct and not have to be at the whim of the state so we we we modified the formula so that we could address the concerns of those who have been talking to us about how to make sure the allocation is fair and balanced we included some additional kind of  opportunities for not only the non profits but for profit we make sure that for profit to have an opportunity to participate but they would not receive grants it would only be under a loan situation we make sure that in this legislation that the states and the cities and counties have an opportunity to implement this plan to do it quickly and not get bogged down with h can remove hud from having the authority to get this done we think their hands are for with other things that perhaps haven't been done as well and we want to make sure that there this is that quickly so i would like to refer all of our members to a statement that we are passing out that is entitled the what is frank amendment to h r fifty eight eighteen the neighborhood stabilization act of two thousand and eight and you will see outlined very clearly all of these some of them are minor modifications some a little bit more substantive but they are addressing the concerns that many of you have brought to our attention if you have any questions  government this is not a federal program the federal government runs the decision as to which properties to buy or entirely up to the recipient which would be the city or the or the county so there was some guidelines about  trying to have some low income housing some other public purposes there said forward but we essentially think that the municipality or the county should make those decisions ok then when they make the up to the we do trust the local governments in this situation we one of the things about this bill is that there is a formula for distribution so that the money essentially goes to where the problem is communities that don't have any foreclose some requirements about income ok general but yes in some cases if the municipality thought that this was a reasonable use of the funds they could do that so is there anything in the bill that would prohibit prohibit this in some cases certainly is but it seems like there are some loopholes in this bill that they could lose could could lead to some fraud and abuse and i you know i have concerns about that with that i would yield back further discussion if not designate be a member the general north carolina amendment to h r fifty eight eighteen offered by mr miller of north carolina page twenty three line six after quote unquote insert quote capital unquote page twenty three line ten before the period insert the following quote or capital b a little has a minimum population of fifty thousand as a term and according to data from the most recent just sending all sense this amendment expands further provision that the waters frank amendment just expanded to assure that the funds are distributed equitably to local governments based upon their need to build now requires that the loans and grants of this program be distributed fairly to i think the nation's one hundred largest cities or fifty largest counties or whatever it is this is a man would expand that to include any cities with populations of fifty thousand or that have a higher foreclosure rate than the state as a whole at least twenty five percent higher the effective neighborhoods and smaller towns foreclosed homes is probably even more devastating than the effects in neighborhoods with larger cities and those smaller towns have a very urgent need to stabilize those neighborhoods by buying rehabilitating and selling to people who live in them they can foreclose times as quickly as possible  we will meet tomorrow to begin consideration you have a j bill it's not going to be a late day tomorrow so it is probably not the case that we will be able to have all calls it will be my morrow but we will finish it next wednesday we will start tomorrow we will go as long as we can probably do about four o'clock or so we don't have to leave when the votes have stopped but we won't have any  foreign minister of ireland the new prime minister of ireland and we will we will break for the teacher and then we will come back and when he's finished and we will finish the bill and on wednesday so we will have several hours tomorrow because we'll be able to do the bill of the castle can you actually build today and then i'll give us two full days of markup on the f h a bill which will be not enough for some people but too much for others and therefore that will be the the read at length the gentleman from calling it was recognized five minutes thank you mr chair this amendment just says that part of the funds that would go to acquire these properties can be used to provide energy efficient or concert energy conservation measures to the house and are to the home that's required and just for low to moderate income housing this will be good it will reduce operating expenses for whoever ultimately buys the property make these properties healthier and upgrade these properties so that they're the kinds of places that i think we want to have in these neighborhoods we've had a lot of testimony  r on the informal energy efficiency taskforce about the need to upgrade these kinds of properties and that's the purpose of this amendment but that i yield back is there further discussion on the amendment offered by the  the introduction of a bill we will be acting we'll be having a hearing and acting later this spring on legislation which seeks to provide energy efficiency mandate or incentives in all the housing programs mandates where we're talking about federal housing that the federal government pays for there we are i think entitled to make some some requirements incentives where we talk about the purely private sector aspect because we are not mandating them but we do the gentleman from colorado i think the if we have all these houses that could be purchased and then refurbished for people to live in that we should be looking forward and i would i would just think that i i think we should also suggest that are making some of these houses let's safe as well because i is there further discussion yeomen georgia those strike last words i thank chairman i i find this amendment commendable jalen colorado and in its intent but concerning in its expansion as we move forward through this bill on through the bill the calm in what citizens across this nation are going to be held responsible when liable  for i wonder where we stop heard this is a precursor to a new activity on the part of this committee and on the part of this federal government and i for one we just want to put on the table and hope that we remember the american taxpayer and that he or she is working as hard as they can to make ends meet and that every item that we add to every single bill continues to increase their liability it's either today or yesterday was the tax day for the nation which means that every single working american worked until today to pay for the taxes that's federal government state government local government require that this day keeps getting later and later every and i know that the jump in colorado is well intentioned and i admire his intention but i also think that it's imperative that we as a committee and we as a congress remember that that the resources with which we use to make all these wonderful improvements come from somewhere and they come from the hard work of americans all stabilization act of two zero eight will provide the assistance that is desperately needed to allow states and non profits to purchase rehabilitate and resell vacated foreclosed homes it's been estimated that a home decreases in value almost one percent if a home within one city block has been foreclosed this figure is even higher for low to moderate income areas in my home district that would result in more than four thousand decrease in value for any home in the immediate area full closures also affect the surrounding areas by leaving homes they can open to vandalism in swat as when just one home is vacated there is the potential for crime when many homes are neighborhood are vacated the potential crime increases greatly and entire neighborhood homeowners affected by the full closure crisis preference is given to those individuals providing a public service including public school teaches first responders and nurses serving under served areas this will allow public servants to be given preferences for the benefits this bill provides i urge my colleagues to vote in favor of our amendment and i thank the chairman fielding is there further discussion on the amendment offered by you you know more from new york with the assistance of the gentleman from amendment to h r fifty eight eighteen offered by mr wilson of ohio page fourteen after line seventeen and start the following number full our demolition for cost of demolishing qualified foreclosed housing that is deteriorated or unsafe today i fully support this important bill my amendment does help to tailor the fit and make it better for my state and certainly many other states that would benefit from this my amendment would allow states approved by h the flexibility to demolish on fit properties if there is a high vacancy rate in a population decline in the area one of the concerns my state of ohio has is that many foreclosed homes have been empty for a long period of time many of them have been stripped of their copper and other valuable parts to re hold to rehabilitate such homes is often more expensive than to demolish them and in fact in many pockets of my state we have a stock of homes that is no longer needed our population this experience a great decline over the past few years and because of our loss of manufacturing sector the city of youngstown has even introduced plans to downsize as a city we need to make sure that this bill which is intended to help states heal is flexible enough to make that happen we need to do what's best for our neighborhoods that are hurting the inclusion of this demolition option for blighted and unsafe housing is something that many states will need to use again thank you mr chairman for the opportunity to present lines for through six appear to say that that utilizing these these monies for demolition that on that land if it were a private home for example it was foreclosed and then demolished on that land it could only be used for public open space inclusion of land bank or other public uses that is that your intent that is correct so just to understand a private home foreclosed demolished couldn't become another private home is that accurate that is correct and so it's up to the local authorities for example if it's not zoned for that area is not zoned for public use or they would be able to to have a layer and secondly the line so that twelve through seventeen have a prohibition against the demolition of public housing is there is there reason that that if public housing is fall in the lap of david that that that we might not want some of this money these monies to be used for demolition about the general would yield it's not that we would want to view but that's what the hope six program exists for but we don't want intermingling of the funds which was to buy up foreclosed property with we don't want that the funds comingle it's not a prohibition on demolishing public housing just in with these funds where the it would it would not interfere with the hope six yeah i don't know that it would interfere with the h chairman i actually have the same concern that my fellow georgian has i was a mayor for a while and i'm fairly familiar with blighted neighborhoods where intermittently housing is dilapidated needs to be demolished and i actually don't think it's particularly practical in many of those neighborhoods to simply take a very small lot and say it's now going to be a public space who's going to maintain it who's going to police it and in fact it typically is better for the neighborhood to have habitat for humanity or somebody else come in and construct a new home where the old home has been demolished and so i would like to ask my my friend to mr wilson too to maybe discuss with me a little bit about what his intent is in limiting the further use of that property for open space public space there are if i may mr chairman there are some options where we could encourage habitat for humanity those kinds of projects that command the big things that we're trying to do here is to stop the blighted homes from being in the neighborhood and evaluating everything around it once especially today when there stripped of their copper and other plumbing parts and things that it's just it's really a difficult situation the neighborhood continues to didn't diminish so what we're really look looking for is the opportunity to win and clear that i'll take away that blight mister reclaiming my time mr wilson if i'm not in a position offer a second amendment second to remember but i would suggest a second remember that you'd be receptive to the idea of a second to remember that would simply leave it to the local officials to decide how this what's the best use for this property where the home has been demolished in many instances i think the local officials include that the best use is not to leave a vacant lot in a neighborhood that is otherwise intact but robert to replace that house that's been demolished with a house that's appropriate and it just seems to me we're not in a position in congress to make that judgment as effectively as local officials would be and so if an amendment is offered by my fellow georgian that effectively would give that kind of discretion to local governmental officials i would encourage i have an amendment the desk and as commandments a consent that the final number twelve in my amendment be seventeen read a seventeen second degree amendment to the amendment offered by mr wilson to h r fifty eight eighteen offered by mr price of georgia strike all after line four through quote unquote on line stick and i asked that the amendment be considered as read five and line six through the word but so that it would read for costs of demolishing qualified for closed housing that is deteriorated or unsafe amounts may be used under this paragraph only the secretary  strikes that portion of the language that requires that the land then be used for public open space inclusion a land bank or other public use the second portion of the amendment would strike the prohibition of again  against using any of these grants or loans for the demolition of public housing my sense is that there may be a different constituency for each of those amendments and if if i the flexibility rests with the local governments to allow for the use of that land where the demolished home sat and support for the second amendment because i believe that we ought to be able to use these have the right to accept or reject one or the other do as i  we have discussion on the first part of the first part yes host we want to make it very clear really going to be public housing legislation the deal says public housing is i think my mike works well and you might want to experience being down here at the bottom  chairman i have an amendment to the desk that i would offer with mrs price and mr wilson all of ohio chairman i thank you very much the base bill is as currently written makes a calculation for the distribution of funds authorized in the bill based upon a formula the first portion of the formula we have no difficulty with and that is the rate of foreclosures that are occurring within a particular state so states that have an unusually high rate of foreclosure and are experiencing a greater crisis than others would receive a greater share the second portion is what was troubling to us and that is a requires the secretary to factor in the median home price located within that state and could actually lead to a doubling of the funds made to the states and so as a result ten states under the base bill would do better and forty states would do worse if this calculation wasn't included this amendment which i want to stress is a compromise and i want to thank very much not only mrs price also mr wilson but you mr chairman for  facilitating this compromise it recognizes that states such as california which do have higher median home prices perhaps need a little boost but states like ohio where the rate of foreclosure is not based upon lighting home prices are not penalized and i don't have because of the the way that we sort of came to this compromise at the eleventh hour all of the state charts in front of me but i can tell you that to my ohio friends for instance and this would be similar to all of the all of the people who don't live in the states that i referenced before ohio would receive or be eligible for one hundred twenty million dollars more of assistance if this amendment e requirements or the opportunities in this bill it's very simple the language is consistent with the current house rules and in view of the desire for fiscal responsibility stated by all members of the house this is an opportunity to step up and actually work in a fiscally responsible way and i would encourage adoption amendment but i recognize and it is extremely limiting the situation today many of us had raised a set of problems we were spending too much in some other area divert from some other area so i hope your memory is not adopted thank you mr chairman i have an amendment at the desk i believe styled number one forty five well designate the amendment order thank you mr chairman this is a very a simple amendment and what it would do is as opposed to using the bill to have half grants half loans it would turn the entirety of the bill into a loan program i am not a fan of the underlying bill so before someone can ascertain what my motivations may be would like to stipulate that having been in this committee long enough i think i know what the ultimate outcome would be but if the bill is going to be passed i would hope that there were things that we could do that might make the bill a bit more fiscally responsible so this does this amendment would not impact the overall total amount of assistance that the taxpayer is necessarily being put on the hook for but it would require that the loans be repaid and as i understand it under the underlying bill there is no interest attached to these loans i think again what it would help is for states and localities many of which are running surpluses and we all know that uncle sam is not would make them even more responsible  if this was to be done in a loan format many people have said that they do not believe that the federal taxpayer will be on the hook for either no being on the hook for very little money perhaps none at all  well if that's true and if these underlying value of the homes ultimately is going to be recouped then these loans ought to be paid back to the federal taxpayer especially when the federal taxpayer is looking over the next three of their taxes raised by an average of three thousand dollars for a family of four and given that the president federal government programs we have particularly in entitlement spending over the course of one generation are going to lead taxes to having to be doubled an extra twenty two thousand dollars of tax burden and so it to me it's a small step to make this a little bit more of a reasonable program to convert it to a loan program  opposed to loans and grants and i think it's a step in the right direction with that mr chairman i yield back that was my job  think the problem for many of them is but to tell the cities that are being foreclosure crisis and remember the funds that they receive under the bill in the form of grants there's a lot that goes into a state budget there's a lot that goes into a city budget and clearly people have to decide what their priorities are again as i stated on the last minute almost every single state in the union is running a surplus most cities are running a surplus the federal government is not it is there is a bottom to the pit in the taxpayer on the federal level is the one having to pay for it so i believe there's a serious problem the nation i do not believe the underlying bill is the correct rim of the to the problem but if you're going to go with a grant program clearly nobody's going to turn down free money so everybody's going to want it but if you start looking closely at some of the state and local budgets i mean for example in the state of california there appears to be ten million dollars that are allocated for the horse racing board california does have a sub prime mortgage crisis maybe somebody ought to tell them that the horses can go back in the stall for a couple years and they can use that money on the sub prime situation as i look at the budget of the commonwealth of massachusetts it looks like several million dollars spent to maintain golf courses maybe it's important to the people in the state but when put against the priority of giving grants to folks who ostensibly need it to stay in their homes then if they're really serious about this they ought to find other places in their budget to make it the state of new york has fifteen million set aside for certain arts and cultural grants i'm sure it's an important program but is it on the level is it on the level of what all particular on the other side of the aisle is term as a sub prime crisis so if the states consider it to be then perhaps they can match the money that the federal taxpayer is being asked to put forth and match the program on a dollar for dollar basis i mean clearly we are all familiar with grant programs and we are familiar with matching grant programs again look at who's has the red ink look at who has the black  request or to gain money through this potential program is a voluntary program and i think that the evidence that mr hanson gave in his testimony was compelling that as i look back on my  service in the state legislature there are certainly ways in which every state can prioritize their monies and all that this amendment is is would require is that the amount of money that they would obtain from this program would be met with an equal commitment with their with their state level money and that the folks in my district want to make certain that that if they're spending their hard earned taxpayer money to washington  for a program that the entire congress believes is is appropriate they want to know that the people receiving the money that the states receiving the money has some kind of commitment themselves to the to the the challenges that they have and that they're willing to step up so i it makes eminent sense and i commend my friend from texas for offering it and encourage it's about the back thank you mr chair and thank as chairman i speak against the amendment and as a former if the goal here is to do something that we as a country can help with at the national level let's do it no strings attached and i say that in direct contradiction to the gentleman's comment that states are flush with money i can speak for my own state florida florida just cut four billion dollars out of its state budget or to balance the books they're not flush with cash they made difficult decisions that cut education they cut health care a whole lot of things a lot of people are very unhappy about there is no extra cash sitting around in florida to help deal with a very very severe problem in parts of florida dealing with the foreclosure issue so i think the so the question is simple either we are prepared to say that it's up to our national government to help out here do it in a nearly terrible tailored way like i think the chairman has come up with but do it in a way that we can help lift up some people that need it in not speculators not people with second homes but do it the right way here then i think that's the right way to do and just to pretend the state governments may have extra cash some may but certainly the states that are in the biggest problem with foreclosures do not speak for florida's one of those so i would speak against a memo is all due respect thank you chairman  to thank the gentleman for his amendment because i listen to the debate here but one thing i know being a legislator from california as well there is waste in every part that you look at and one thing we are doing we are providing  funds to the states to do something about it and one thing i've always found there is synergy when you ask an individual if i provide you a dollar will you also put a dollar up and people care more about it when they're putting some of their own money up knowing that i have further time i'd like to yield the rest of my time to the gentleman from texas and i thank the gentleman for yielding i listen very carefully to my colleagues on the other side and all the arguments that i think were use that obviously be applied t federal government as well we understand the states have priorities so does the federal government but relatively speaking at least in this moment of time they appear to be in much better financial shape than uncle sam not only are most days i didn't say almost eight running a surplus i think perhaps it's three or four the last i saw that were not clearly uncle sam is not in the in the red it ain't just continues to mount more spending fuels more taxes and at a time when middle income low income families are struggling to make those mortgage payments to fill up their cars and trucks to think that there could be an even increased tax burden on them i think is really asking for  too much and i don't think it's too much to ask the states is the federal government has to do decide what your priorities are and if it's truly a priority then you ought to be able to match it finally i would say to my dear friend and colleague from missouri and my fellow conservative i'm learning something new about each and every day and as we speak the republican study committee is meeting if the gentleman would like an application since we know he's a conservative we might even can that or changing the name of the organization i would yield to the chair bill we will break i'm told there were votes coming tell us about two thirty but they often lie when they tell you that we will have votes at three thirty or one it would add a civil monetary penalty equal to twice the total amount of the misuse funds in addition it would expand the scope of those covered by the bills misuse of funds from just states states and other recipients currently as i read the bill the bill only requires that misuse funds be repaid without any penalty whatsoever and that it does not apply to other non state non locality  recipients i fear that the standard is too low that there is not a sufficient sin of for the taxpayer money to be used with great care to target it where it is needed most  all also know that within different players within the industry that there has been a huge amount of misuse of funds been a huge amount of mortgage fraud there has been a huge amount of speculation so what we attempt to do is again raise the bar to ensure that hopefully the taxpayers money is used with the greatest care possible i fear without this particular standard we may invite more fraud and we've already seen that it's helped to see if we could come to some agreement here i think we don't make a good point when he says it couldn't just be the state it could be other recipient a grant a loan funds so i would find very except all the first two parts of the amendment the third part though causes me problems but since now doesn't say material it's now an absolute to ask for a penalty of twice the amount when it might have been an inadvertent mistake seems to me to be wrong so i if the gentleman would i would be willing the general would would would discretionary double penalty on a nonprofit group that may have inadvertently made that mistake yes they should have to repay it but i would not want to have them doubly doubly penalized i would yield to the gentleman mr chairman i would  like to accept your unanimous consent so procedurally however this is well the i ask unanimous consent that the third paragraph in this amendment be dropped if there are objections hearing on it is the question is now on the first two lines the first two paragraphs of the amendment which would add or rather recipient or grant alone funds all those in favor will say i i opposed the eyes have any single family housing clearly the goal downpayment assistance grants might be laudable but the fact is as we study the sub prime mortgage meltdown we know that a lot of the problem is helping put people into homes that they cannot keep and at the end of the day i don't know what good we've done them i don't know what good we have done the taxpayer and i don't know what good we've done the economy  clearly we have seen a correlation between money that is put down in the ability of a family to stay in a home and so again i don't i don't agree with the underlying premise of the bill but if we're going to have the bill number one we ought to help people not just get the waterline to the nostrils in a year or two later to their eyeballs but help them particularly those who may need to stay in a home due to a reset the through no fault of their own they might have had some kind of economic setback but again i fear that without requiring a greater down payment that we are simply exacerbating a problem and to some extent maybe kicking in a nother housing meltdown problem down the road and so we ought to be encouraging in my opinion more responsible loans in to the extent that uncle sam is going to help set the marketplace people autotrophs have a little bit more skin in the game again which i believe is good for the market good for the economy good for the taxpayer and ultimately good for them we've seen too many instances again of either the marketplace or through misguided government programs getting people into homes that they couldn't afford many of whom might have actually county purchases a foreclosed property obviously hoping they get a bargain this wouldn't stop them from selling it to someone for for a single family residence as long as there was no downpayment assistance as part of whatever the rules were and in some cases might be the person who had been in the house and had been foreclosed would this be any obstacle to that well mr chairman i think the chairman for yielding it would not be my intent to prevent that transaction i do not believe the language is drafted does that i don't think it does either and i would say with that understanding i would have no objection to this amendment we would just clarify that you know someone might argue well because you bought it a little cheaper and you sold it  that's right i think the chairman just clarified opposition and no matter what a press release might have alluded to this is not intended to provide downpayment assistance to acquire rehab properties that's we would appreciate that it does look like we will be proceeding shortly to the bill of the the castle can george the bill although the gentleman  now recognized by you mr chairman this is a very straightforward amendment and it says that all properties acquired by using this grants or a loan amounts made available under this bill  then resold at public auction typically a public auction anyone over the age of eighteen can is free to be on the parcel of property sold and sold to the highest better the public auction would make certain that public interest terms price and the transparency the proper process ensures integrity of it without a public and transparent auction i believe that reselling state owned properties  there will be there is a great potential without the public option for corruption and backroom deals between government officials and nonprofit entities or buyers private sector buyers and whether the buyer is an individual who buys the intent to occupy or invest and resell the public auction guarantees that all in the community have the option to buy rather than letting a governmental official determine you know based on their own opinion or based on their own personal interest who's the best buyer is for the property i think this ensures the integrity of the process i think it still fulfills the mission of this legislation and at the same time ensures that there won't be a corrupt process on the second side of this legislation that the state will be in charge of and this just ensures integrity of the process and the transparency of the process again california mr chairman members i would ask the members to oppose this amendment up first of all we've got to have some trust in local government we talk a lot of around here about not imposing on local government all of our public policy ideas this is a time when i believe that the mayors of the city councils and these local governments what these neighborhoods stabilize more than anybody else we don't want to slow down the process  dictating to them that the only way that they can sell these properties would be through auction let us give that authority to local government to put these houses back on the market again so that they can ensure that they don't continue to have neighborhoods where people who have remained they're living next door to these properties having their values driven down because they're sitting there vandalized and attended to trusts the mayors and local governments to make from north carolina i too trust mayors and governors and i also believe trust but verify and part of this money is the loans we want to ensure that the federal taxpayer olt repaid and at a time when people continue to distrust many forms of government i think a little bit more transparency and a public option is obviously the fairest way to deal with this and they're using again the federal taxpayer dollars and we ought to hold it to the highest standard i'm not sure what other method that these are the localities may want to employ but they're not they're not using their city taxpayer money they're using their federal taxpayer money there has to be a higher standard and i'd be happy to yield the balance of my time to the gentleman from north carolina i appreciate a gentleman yielding in north carolina we have  a process for the state to sell land or to sell property of any kind is through an auction and my concern with this is that you have some in local government or some in state government that would use the product understanding her legislation by what means would they put these properties out as currently designed without this amendment is it or are they prohibited from using public option or is this something that they just go to individual  me we do not dictate the way by which these properties would be sold we don't say that you have to do it by auction or you cannot do it by auction as i said i would rather not in any way  try and tell the cities how to do this i would suspect that cities would not only make the monies available to those entities that are eligible be they nonprofit for profit and they would go back on the market in the way that houses are normally so they would place be placed on the market for purchase by those people who are eligible to buy them so we're not saying that a city cannot perhaps have an auction sixty ninety perhaps never sell and if it's put on the market that actually furthers the blight you're saying and number of these communities if you have a public auction it is a date certain and most of the time you walk away with  seller because of an auction maybe advertise thirty days in advance on that date they walk away they have a qualified buyer and it's done and so i think this speeds up the process it is very clear open reasons for disagreeing with this is that we do not want the cities to get the highest possible price in every case we may be able to use it affordable rental housing for employees of the city who face an ordinance according to the city and have trouble   i respect where the gentleman from north carolina is coming to do a public auction but i think that's just part of the menu that's available to the local government people as to how they want to sell or you know transfer these properties but i guess what struck me right out of the box is why you wouldn't want to engage the real estate community in selling these properties to get the best amount for the taxpayers of the united states and so i i i was surprised by your amendment because it seems so different than what i would have expected you to to bring and your your comments about you know moving it quickly through a public auction that certainly can be done but i believe you know that the real estate professionals are going to be able to sell these things properly you know in good faith you know i guess i trust that sector as well and i think to try to limit what the local governments can do in engaging real estate professionals just really cuts out too much and i think that that would be it would hurt this particular bill and would hurt the communities because they're further discussion if not the question is on the remember those if i will say i oppose no no gentleman pennsylvania when i was in the chair committee come to order the new majority is becoming so frugal now we're doing away with gabby douglas well now call up h r fifty five seventy nine and the clerk will read the report the bill h r fifty five seventy nine to remove an impediment to travel debt restructuring on the part of holders of residential mortgage loans and for other purposes  enacted by the senate and house of representatives of the united states of america in congress assembled section one short title of this act may be cited as the emergency more without objection the villa should be considered as read and open to amendment in any point myself for five minutes on the bill h r fifty five seventy nine the emergency mortgage loan modification act of twenty eight sets forth a duty of loan servicers to maximize recovery of proceeds from pooled residential mortgage loans on behalf of the trust and in the best interest of the investors in the aggregate without regard to the interest of individual investors or truncheons this duty applies only in the absence of contrary specific contractual provisions the bill provides that he service or acts in the interest of all investors if it engages in loan modifications or other loan mitigation efforts for loans in default or about to default additionally the servicer must a reasonably believe that the mitigation will maximize and that value present value of the loan over the value that would be realized through foreclosure absent contrary contractual provisions of the bill provides a safe harbor for server shares that consistent with the duty enter into a qualified  loan modification or workout plan it defines qualities of a qualified loan modification or workout plan as one one is scheduled to remain in place for at least five years unless the bar sells a property or refinances alone to does not include repayment schedules that result in negative amortization and three does not require the borrower to pay additional points or fees h r fifty five seventy nine spent specifies that nothing in the bill limits the ability of the service or to enter into other types of modifications or workouts applies only to owners occupied residential mortgage loans and only to modify modification or work out plans an issue ated prior to january first twenty a level the capital markets subcommittee held hearings last week on h r fifty five seventy nine the witnesses at the herrings included a representative of the mortgage bankers association who talked about service and lending sift the two who spoke about investors and securitize ers and an expert from a law firm with knowledge knowledge of servicing and investing issues in response to question two questions proposed by myself and another hearing of the financial services committee a at this time i would like to submit a letter from f d i c chairwoman sheila bair expressing the f d i c strong support for this legislation without objection the letter will be entered into the record at this point they need to make sure that the narrow interests of some investors are not impeding efforts to help families remain in their homes i urge my colleagues to support h r fifty five seventy  originally drafted this legislation the idea was to find the simplest method possible to expedite the modification or work out plans for mortgages some of this is happens anyhow as everybody here knows when mortgage get into trouble that the banks also sit down with the the mortgagee and try to work out terms the person can live with but there was some concern about the possibility of lawsuits and the need to do it justice in a legislative manner in order to prevent some of those things from happening and to expedite the number of loans that could be worked out that way to me this is far superior to dealing with the kind of legislation we have in the first bill will be voted on at three thirty today and tomorrow's bill simply because of the cost of those bills this won't resolve all the problems i understand that now must suggest shouldn't deal those other bills but i would suggest that if you can sit down and have the loan servicer with the property owner who may be in distress in some kind or another to negotiate some sort of resolution of their problem you don't have a lot of public money going into it and it works far better and in many instances it provides for that discussion to take place in the earlier it takes place the better it may be so the bill was introduced and then it was  consumer groups those holding the loans either in pulls or otherwise and the fact that they are to be protected as well as possible i think makes a lot of sense but the thrust of this is  four or five months behind in payments and it's just or it may take it up to seven and a half percent interest and they just can't afford that at all and perhaps it's in everyone's best interest for them to sit down and negotiate terms that are different than was in the perhaps broader community benefits because you don't go through a foreclosure procedure and i think all of us understand what a foreclosure can mean within a home community so my view is there's a lot of winners as far as this is concerned this legislation has been looked at carefully by a lot of individuals who are more knowledgeable than i about all the details of it and i'm comfortable that we now have a good piece of legislation i hope it will move quickly in the senate  senator specter shown a lot of interest in it as as it hopefully will move in the house in that we can move forward with the loan modifications which may eliminate some of the pay out provisions that are necessary in some of the other legislation which we're moving forward amendment to address consumer group concern we were vies the safe harbor provision relating to persons who hold an interest in the loans or pools pursuant to a derivatives instrument in order to clarify that the provision not limit the availability of remedies against lenders for fraud abuse of lending practices etc by consumers to address to address investor group concerns we revise that establishes a duty in safe harbor quote absence pacific contractual provisions to the contrary to delete the word specific and to clarify that a service or make choose to best the best option from among all loss mitigation options including foreclosure as opposed to measuring everything else against foreclosure and we tried to clarify that for purposes of the safe harbor negative amortization would not include capitalization of delinquent interest are there any other  if either of the gentleman could help me out here as i try to wrap my arms around the language that you just did more broad than that the entire safe harbor provision first a simple question i guess when when we speak of a safe harbor correct me if i'm wrong that does not preclude a beneficial holder of a beneficial interest in this pool of loans or otherwise from bringing a lawsuit against a service carrier is that correct let me wish castle can that is correct as originally drafted it might have done that this far but it is correct it would not do that now its present form ok and then the second sort of follow up on that is if you if you would be so inclined is does this allow for if a lawsuit is brought and immediate summary judgment motion then made by a court to preclude that suit going forward where would this be an issue for a tr fact that's a judicial question and i don't know if i know the answer to it i would think that you could potentially bring a summary judgment motion not to be able to go forward and then subject to rethink and an argument the court could rule on that whether you could go forward or not it wouldn't be absolute i don't think but i don't know any reason why a summary judgment possibility ok and then in order for me really get my arms around this is it seems what you're going to august i am if i if i understand it all correctly then it's a great idea but it seems to be doing in these two pages of the bill is basically setting up a  defining what the duty of care is right and when we define what the duty of care is i guess you can do one of three things you can either make it a tougher duty or carry you can make it an easier lower duty of care and make no change to the duty of care at all because right now under the current law those who handle these securitizations have a duty of care to the fiduciary so there is an existing responsibility of them in our question i guess i'm trying to get to grips on is does this increase that duty or does it lower the duty or does it do make no changes to it at first blush i would say maybe it makes no change to the existing law whatsoever because the end of the day it says on page three lines one through five is that they have a responsibility to reason leads modification work up plan will maximize the net present value to  realized and alone over that which would be realized through foreclosure and which i would assume is what the servicing carriers servicing entities are already responsible for doing that they should be doing nothing in their fiduciary relationship to be working out loans that would give you give the lenders anything but the maximum present value so how does this change the overall duty of care does it is that a lower value a lower responsibility that they have under this bill makes it a little bit easier for them standard is in large but it's lessened as it applies to the individuals i correct discussion i believe that it is correct and i'd look to staff if they had the staff has better judgment on that than i it's getting getting to the technical legal interpretation at this point as i understand counsel says only provides additional information about the existing duties of care and doesn't in any way change those  terminology because the duty of care may shift but the standard of care can still be the same with reference to your summary judgment question who is a back who is shifting to the well as the chairman has indicated the duty of care goes to an aggregate from an individual to the aggregate now that's the duty of care and you're asking about does the standard remain the same with the duty shifts that's how i perceive your question that's that's alumina if i appreciate that and if the gentleman if i can continue then as a duty shift from one to the other and really don't know the answer that's one throwing out if a studio shipping from the individual to the aggregate does the standard that we had before and also the duty to the individual has that change it would seem like it has that shit that standard has therefore gone down i would think so  but let's have council advice on your specific question what council give the response ok with the light of the new information i get a clearer picture of it we're changing who the duty of care is to no care or in the standard of care the the provision is consistent with duties that exist by contract in existing pooling and servicing agreements that's true in the base bill the duty to investors in the aggregate is also consistent with existing provisions in p s and pulling out servicing agreements also it's consistent with the standards set forth by the american securitization forum for standards for  in the general terms of contracts this provision would clarify the existing provisions to the extent that there are any contractual provisions that stablish duties or other responsibilities for the servicers those would prevail there be no further discussion without objection the previous question is ordered a vote occurs on the amendment of those in favor shall signify by saying i all those opposed no the i's appear to have it the amendment is agreed to are there any further amendments here not being aware of any further my munch in the previous question is ordered on the bill the question now