this i just want to a couple of things very clear about the manager's amendment i'm going to sit down california is here because he and i had discussed a part of this the manager's amendment does clarify the supervisory to apply for one to anybody that does not meet the eighty five fifteen test there were issues raised by some current holders g m a t and some of the securities firms and we did in the manager's amendment that was negotiated among the gen amendment that was agreed upon among all of us the right to do any more than they currently can do legally we are rearrange some of the supervisory roles we do close a foreign bank loophole that had been called to our attention and now and i noticed right to have narrowed we restricted industrial loan corporations equivalent to what d m a he has namely not to get generally into the banking business but to finance their own transactions i think that is a very reasonable argument the general when i are going to be urging members and we appreciate we think we got some agreement here not to try to do that in this vehicle this bill will go to the senate of course all bills that originated here go to the senate we hope that this will be an exception and that it may in fact emerge from the senate but we do not expected to emerge in the senate in the exact form in which it is sent over we believe that the senate is go to a large your number of exceptions etc it is our view that we are best served if we preserve this bill as it is so that when we negotiate with the senate we can get fairly specific that is  reform of the i'll see charter option that's an option available only in a handful of states the i o c charter is the last loophole remaining for commercial for washing to engage in full service banking while the majority of current commercial owners of industrial banks do refrain from using all the banking powers available to them the broad aisles the charter allows for a complete mixing of banking and commerce which i would consider unwise the separation of banking and commerce is not a new prime and fats it's been around for more than eighty years and the trend in congress over the past several decades has been one of removing loopholes and exceptions in bank law if you want to engage in full service banking you must become a bank or thrift holding company chartering a niall c and your jaw is really your only option to make an end run around the bank was an acquire the ability to engage in full service retail banking well that secrets out and applications for aisles sees look nothing like they did decades ago when the charter was first started as california maryland and others who have taken notice of that recent trend and i'll see applications and installed roadblocks to an expansion of charter state action is not enough however it's time that congress address the problem directly using the time wisely given to us by the f b i seaboard this bill is a culmination of significant bipartisan efforts undertaken by  chairman and myself and others just trying to balance between protecting those aisles these already in existence and preventing any further widening of the loophole by new commercial firms i understand that this bill is going to require additional compromise in order to make its way to the president's desk but i'm optimistic that congress can deliver before the current moratorium expires and i want to thank the chairman i want to thank his staff for all a time as you can to over the twenty minute i thank you mr chairman you know as we prepare to vote today on the future of the charter for industrial loan companies i must again reiterate my opposition to the legislation the force a day and i think the example here is we're looking at the g m c as we're looking at the charter for the automotive industry and we the we see the efficacy of this and now we're saying well maybe we'll make a carve out for this industry i just want to go through a few brief points even though industrial loan companies are regulated just as regularly as federally insured depository institutions i know that some continue to doubt the adequacy of that regulatory structure i just want to recap four points and it won't take me but a minute to do it regular examinations of all cs occur focusing on safety and soundness consumer protection community reinvestment information technology trust activities as a matter of fact for the largest l c s you have on site supervision that is almost continuous for the most complex of these they're subjected to a variety of f d i c rules and regulations part three twenty five pertaining to capital standards part three sixty four pertaining to safe and safety and soundness standards of operation and of course restrictions under the federal reserve act twenty three a and twenty three b which closely govern transactions with sees affiliated holding company we've been through these arguments i believe these provisions demonstrate that current regulatory structure is sufficient if our objective is to maintain the safety and soundness that has accompanied our banking industry over re years and in closing i must again express my concern that this bill may have some unintended consequences which could adversely impact the financial services industry and the economy at large passing the industrial loan holding company act will simply shield incumbent making institutions from competition i believe i'll seize approving their ability to create more competition in the industry resulting in better prices and services for consumers we basically admitted here today we all know what they've done in the automotive industry and yet here we are basically curtailing the charter and so that's that's why i'm opposed mr chairman thank you i thank you and i'm going to just give myself one minute i may have given an inaccurate impression and  i am not anticipating that the end of this process that we have carved out for the auto industry that will i think be it recognizing the practicalities there will be a form for self financing one's own purchases that will be created will be limited to the auto industry it will be for any entity that meets that particular economic profile and i may have missed a that will be of particular interest to them but not limited to them don't california thank you mr chairman and just kind continue on this line as someone who spent twenty five years in the retail car business i can tell you the value of that i'll say is have been to the industry and they have been used as you said in a very limited way specifically for customers but have been very important and valuable both for customers in obtaining financing and also for the for the auto manufacturers as a loyalty building type of arrangement and clearly the there is nothing i believe that any of the auto manufacturers who currently have have done which is has led to what you're dealing with in this bill and so i have an amendment that is a carve up of the arms trade which all which we'll discuss when i mention it later but i would like to agree with my colleague from california and the chairman that i have one for the auto industry here because it is an industry which i have a great deal of knowledge and and background but i agree with what the chairman said that there are other circumstances that are similar and that hopefully we won't just we'll allow other industries as well to do something along the lines of what the autos have done then and obviously also allowed not every auto manufacturer has an aisle seat now so it would be not fair competitively to have those that are in b things one it enhances regulatory supervision of aisles which ab leave is necessary it grandfathers existing elsie's and it prohibits commercial firms from a least talk about and going forward i would like to see our domestic automobile manufacturers and dealers playing on a level playing field i think that's unfair and you have expressed those same concern does pass it will include the very carefully drafted allowing of ed to be used to do their own self financing from large purchases with the f d i c given the right to enforce  that i believe we are ready to move to the bill and i will call up the manager's amendment r six ninety eight to amend the federal deposit insurance actually stablish industrial bank holding company regulation and for other purpose had were very good negotiations that resulted in agreements so this is a set is to some extent a realignment of regulatory responsibilities it closes the foreign bank loophole and that it's long as they remain at the eighty five percent level they don't lose it that's the kind of cleanup as i said it was i think negotiated among all sides and i would now yield to recognize the gentleman about it thank you supervise industrial blank holding companies that fall within its purview the third thing you mention o t s in this regard the amendment also helps close a loophole in the current law that allows a foreign bank to purchase an gave the federal reserve the right to conduct that review and i do have concerns which you mentioned that we not take regulatory authority away  senate and before we saw it back in the senate either through conference or in the senate that he would have some similar amendment put in the bill at that point or perhaps as he just discussed something more broadly worded that will include not only auto industry but other industries with similar circumstances and similar restrictions i'm willing to withdraw this amendment and so i'd like to have a general would yield i said i appreciate the gentleman i do want to thank the gentleman for offering the amendment it is you know as we see that there are industries for the first time in history has slipped into second place on the world market it's  important for us to make it to facilitate the auto industry in synching the deal by being able to offer this financing at lower rates and that translate into sales harley davidsons worldwide headquarters is in my district they're outstanding employers and i do believe that mr chairman with your with your very broad and would create a huge loophole but also recognize the inequities of develop whenever you have a grandfather clause and so i'm certainly happy to work with them to try to create six p m even if we were to finish here earlier we will call the vote any earlier so members can make commitments but members should then be on notice that between five and six we will have some local vote because there will be some and with that i recognize the gentleman from california thank you very much most sensible political thing to do or say i would like to note that i coauthored this bill with mr bob ney one fortunately is not here in this congress at this time but he is to be given great credit for the work that he did in advance in this legislation so i'm very pleased and proud that we were able to pass it out of this committee last year along and off the floor and today we're bringing it back because did not complete the legislative cycle expanding american homeownership back to two thousand and seven which i introduced with the chairman frank on march twenty ninth two thousand and seven is as important as the federal housing act of nine thirty four that created the federal housing administration ironically the reasons for f h a they were relevant then are relevant today f h a was created one because low and moderate income borrowers cannot get mortgages in the private market to the mortgage market needed to be stabilized in local and regional markets and three housing plays a strong role in the nation's economy it is undeniable that housing is important to the strength of the economy and that if current conditions in the sub prime mortgage with the rise in deep thoughts and foreclosures continues it will destabilize the mortgage market and many bars who need to refinance mortgages and to purchase a home do not have safe alternatives in the private market h r eighteen fifty two addresses these issues this way by allowing f h a to use risk based premiums providing barrios protections through counseling and disclosures raising a loan limits and allowing to modernize to technology and human resources americans are waiting for the congress to help bring relief from the separate i'm lending market i believe that congress pas i believe that we that the bill that we passed the f h a bill last year would not be witness and had we passed and witnessing the increase in the number of mortgage defaults and foreclosures it is important that we pass this bill and take r eighteen to deport to the floor for consideration as soon as possible americans are ready for reinvigorated and to help them achieve the american dream of owning a home let me just say as i wrap this up that a had been viable and had been there to provide the mortgages for the low income and moderate income  citizens that we're trying to protect and give some opportunities to now they would not have fallen into this expect ever an expanded subprime market and the sub prime market got very careless they did not vet incomes they gave no interest interest only loans they came up with all kinds of exotic products that really did put a lot of people at risk but that's why it was formed in the first place we miss bigger bill as opposed to miss waters bill is almost identical to f h a modernization legislation that passes house by a vote of four hundred  i do support the overall purpose and direction of this legislation created in one nine hundred thirty four f h a was designed to broaden homeownership protect lending institutions and stimulate the building industry while the program has been largely successful in accomplishing these goals f h a share of the mortgage market has been steadily declining in recent years falling from nine point two percent in two thousand and three to four point one percent in two thousand and five modernizing and strain lining the current f h a program is necessary to make the f h a program a more viable alternative for many home buyers who in the past have turned college financing and nontraditional loan products available in the sub prime mortgage market so this bill for us today and particularly if we can make some needed changes i think we'll have a result of steering people away from some of the sub prime bills that became a problem for him and in the f h a financing both most of the bigger bill in the water bill would help to can insure and making condominiums easy to easier to insure by the f h a now while there are consensus on those issues there are some significant differences remaining between the republican than the water's bill and devising a risk based pricing structure for the f h a program that matches the premiums paid by an individual borrower to that borrowers credit history i understand there are arguments for and against risk  premiums and i think both of them have merit in addition h r eighteen fifty to the bill will force permits only first time home buyers to participate in the new low and no downpayment lo programs created by both bills while miss bigger bill allows participation by any f h a qualified bari or far the biggest area of disagreement and i think this is probably the only sticking point on the bill  between republicans and democrats on the f h a modernization legislation is a provision in missed waters bill arthritis and the use of portion of the so called negative credit subsidy generated by the program to fund a national housing trust fund on the negative credit subsidy represents a premium surplus collected from the f h a borrowers in essence the bill before the waters bill would redistribute those fronts from one segment of the population to another by using premiums paid into the f h a insurance fund to subsidize unrelated government housing programs many members on this side of the aisle question whether this represents an appropriate use of the surplus generated by government insurance program and we intend offer amendments to the bill to address these concerns in closing mr chairman i look forward to working with you with ranking member bigger and chairwoman waters with mr miller to enact f h a reform legislation and modernize this is critical program was protecting its intended beneficiaries which include many low sort of the paradigm of how this committee operates there was a substantial amount of agreement we agree that the f h a a government agency has a very useful role to play in supplementing the market this is a case where a well designed public sector program can be market enhancing not is not market substituting and we have a great deal of agreement on how this can happen and the f h a if we can get people into the f h a rather than into some of the other kind of loans they have everybody will be better off and it is also the case that within this basis of agreement on how system would work and how we should be looking for ways to through the public sector do some market enhancements and not substitute for the market there are a couple of philosophical differences i q there's one big one the gentleman mentioned and that is we do take some of the money that would be generated from this bill and you just for for housing but i want to make clear when i first saw the bill to set up a low income housing trust fund it's sort to take money that now goes into the f h a that it's now f h a generated surplus and huge it and i said i thought that was a mistake i said i thought we should not be taking funds that come from existing f h a programs and divert them this bill does something a little different than that philosophically there are similarities one of the things this bill does is to take the cap off the home equity mortgages the heck and she b o told us that this will generate significant additional revenue for the federal government similarly on now in higher income more expensive homes in the high cost areas to be included will produce some revenues what we do is not dip into the existing flow from into the f h a share price but we take the additional revenue that will be generated from this bill and we do three things with it in a member that we will be dealing with first of all we make sure that the f h a home program remain solvent by the way for those who say that f h a fun shouldn't be used to other purposes she be zero confirms it over the last five years the f a q share plus produced eight point nine billion dollars to the federal government that is housing activity generated by  has gone to fund a whole range of other things in this government they want to rock foreign aid bridges to nowhere bridges to somewhere it has news in a very significant amount that's a point nine billion about a billion eight plus a year we're talking about a couple hundred million a year we are using some of it for housing counseling which everyone agrees is important we then do say that the rest should be set aside for use in a affordable housing fun as we did with the g s a and i understand it's a philosophical difference about that we do believe that when you are generating funds from additional housing activity that it's legitimate to try and do something about housing construction a great need in a country the other area i'm not sure there's a difference there's not a specific memory on this but one of these we are doing is that this is a very important piece of this to make we are encouraging the f h a don't lend to insure the mortgages for people who have weaker credit and as an insurance program the f h a has asked for the right to charge those people more what we say in this bill i hope will be yes at the outset you can charge people more but if a par  with we credit a single mother making forty thousand dollars a year makes all of the payment she is legally supposed to make after five years he should be rebated not everything he paid in but the extra he paid in because of what we credit that is i do not think the federal government ought to say to a single mother making forty thousand dollars a year or a working family making forty or forty five thousand dollars a year even though you have made every payment you were supposed to make because other people similarly situated you have defaulted you will be you will be charged more than a member of congress would be for the mortgage insurance i don't want people who make a quarter of what we make paying more for mortgage securities if they make their payments people don't make their payments that's a different story and yes we do a little cross subsidy here we say that for example when people are now going to be allowed to get mortgage insurance and mr miller sister my district you know if we're in the high cost areas that will generate some money for the federal government we will use that to show you again if you have a bad credit and you default we will make it up there but if you have weak credit and you do not default i really believe it would be inappropriate for the thank you thank you mr chairman i must say that i will be brief as we have a lot of work to do today but and i'd like to start on a positive note but i must say that i am disappointed that th e bill we are considering today differs in quite a few places from the bill that was passed last year and i do agree that f h a modernization is absolutely needed but i just wish that there were these things that were added are the provisions i believe are not bipartisan and delay the f h a modernization and and that's why i have it introduced  a bill h r seven hundred fifty two which is a dead i call to last year's bipartisan bills and and the one that you just spoke about is the biggest concern for me and several of my colleagues and the inclusion hundred fifty two that creates a funding placeholder and siphoned off f h a funds to a brand new government trust fund i think that taking the funds out of every chain using them for a purpose unrelated to its core mission would threaten a sovereign c of the f h a fund and its ability to pay out the insurance claims and now you talk about an awful lot of money but i think there are concerns and that as we are going to increase the  perhaps cause more funds to have to be used and we're not sure how much that would be so i i concerned about whether or not to be more defaults which would translate into a lack of the necessary funds to cover the borrowers who due to fall and similarly taking money out of the f h a pool could threaten then the solve the of the program is expensive so either the federal government would have to appropriate more funds or f h a would have to limit the number of poor credit risk powers that can possibly insure and i think that's the purpose of what we're trying to do here is to  have an alternative to the subprime lenders so i think that there certainly are areas that that we have an agreement and there are a couple other areas that i look forward to addressing today including there were risk based pricing and down payment requirements and so my hope that we can work together to address these concerns so that the modernized f h a can get to work assisting more low and moderate income americans in buying and keeping their home california mr miller i think it was chairman i know we started talking about this bill mr franken about three years ago with chairman oxley and it's something that i believe is is absolutely long long overdue and and for some reason there has been some confusion among some people i've heard debate this issue they confuse section eight with f h a and they're just absolutely not the same product in the past moderate income homebuyers who cannot qualify for conventional loans because of high loan violations or other high payment income ratios c still achieve the dream through an f h a program the problem with every chase is it's been so inflexible it's virtually become irrelevant throughout the marketplace there's good and bad amendments offered to this build a day i hope the good prevail and the bad go by the wayside but you have to look at what this product has done and the lack of utilization especially in the last five or six years in my dress to cologne the amount of loans that have been made by f h a have dropped ninety nine percent due to the fact that they could not compete in some of these high cost areas basically people based on geography they lived in where they came from where secluded from this program this bill is meant to deal with the crisis we're seeing in sub prime today to provide an alternative i'm not talking about the good subprime lenders i'm talking about those out there who virtually avoided and neglected to look at basic reasonable underwriting criteria and made loans to people who could not qualify for them  the bill before us today i know some myself and others have some disagreeing with certain parts of the bill but overall it's a very good bill i believe and it's absolutely needed to deal with the crisis we're facing in this country i think a lot can be done between now when this bill is being debated marked up in committee and the time it hits the floor to make this a better bill i trust the chairman as he's done in the past will work with us on many issues that we consider reasonable he understands our position and does not negatively impact what we're trying to do here but this is so so overdue we have faced a situation in recent years where g s t could not compete in high cost areas they could not provide a product out there that was much needed throughout this country f h a has been put in the same situation the g s t is where this is a major step in the right direction last year we put a good bill out and as many good bills we put out in this house they just were put in some clause in the senate they never became law my trust that we can change at this year especially when both houses realize that there is a huge problem in this country and this provides a needed alternative to deal with the situation we're facing today with people who are in default in some of the subprime loans this is not turning to that they can immediately move into there's many things in this bill i think a very very good and they're relevant to the impacts we're facing in the housing market today and i'm going to support this bill i hope some of the amendments that we're going to propose will be accepted to from our perspective make it a better bill but it's a bill that's overdue it should have been done three years ago when it wasn't but it's never too late and hopefully this bill will be signed by the president as soon as possible and can be relevant to marketplace i  the gentleman from new hampshire is recognized for five minutes on his amendment thank you mr chairman mr chairman my amendment would ensure that borrowers are not adversely impacted by escrow agents who fail to make on time payments specifically when an escrow agent fails to make an on time payment and a borrower is faced with a late fee the escrow agent must reimburse the borrower the damages within sixty days in addition the borrower's credit will not be affected by the escrow agent's late payment because this information may not be submitted to the credit rating agencies this amendment would simply codified existing heard in fannie mae rules for f h a mortgage is mr chairman in the r regulations under the section related to penalties assessed mortgage or as it says quote penalties for late tax bill payments shall not be charged to the mortgage or unless it can be shown that the late payment was the result of the mortars mortgagers error or admission unquote also in fannie mae's single family two thousand and six servicing guide it states under part three quote the servicer should use the funds in the borrowers escrow deposit account to pay taxes and other related charges before any penalty date whenever funds are available to service or must pay these expenses early enough to take advantage of the maximum discounts allowed of the deposit account balance is not sufficient to pay these obligations the servicer should notify the borrower and then advance its own funds the borrower may be below for the amount of service or advanced if and in the manner permitted by the mortgage documents applicable law and government regulations if a penalty is incurred for late payments of taxes in the bar was a factor in delaying the payment the servicer may bill the borrower for the penalty otherwise the servicer must pay the penalty from its own funds in such cases we will reimburse the service or for any funds it has to advance quoting those for late fees and tax penalties unquote now millions of homeowners are at considerable risk from companies that service their mortgages many have already suffered irreversible consequences such as cancelled insurance tax liens and foreclosures due to mortgage services making on timely payments from escrow accounts borrowers should not be forced to pay the consequences of delinquent actions from their service or this amendment mr chairman would tighten the rules for loan servicers and make the servicers reimburse the borrower for any fees they were forced to pay the servicer has sixty days to reimburse the bar and if they don't make the payment in time the secretary can increase the amount of the penalty including attorney's fees please note that this amendment does not force the secretary to assess penalties but if there are bad actors the ought to be consequences to stop them this growing problem was highlighted in a washington post article from march eighth two thousand and three quite some years ago the article explains that if a service or fails to make an on time payment on a b is property insurance property taxes or other fees the borrower is left uninsured against fire storm damage and is technically in default on the terms of his or her mortgage this type of failure to pay property taxes could lead to a ta  lien by local government and even foreclosure this is unacceptable my amendment would add accuracy and timeliness in escrow account disbursements to the list of legal rights that homeowners have in connection with their mortgages is there for further discussion on the amendment by the gentleman from new hampshire if not to recognize self thirty sec to say this is a member would help us with the rules committee since i was just costed by the chair of the rules committee whose bank failed to make the payments on time and she forcefully called that to my attention and the negative consequences if there is no further discussion the question is on the members of new hampshire those of bible say i suppose of the gentlemen deanna's recognized for five minutes thank you mr chairman i would like to offer this amendment it has to do with condominium developments composed of manufactured housing currently f h a may insure mortgages on individual housing units in condominium development and also may insure mortgages on manufactured housing units unfortunately f h a regulations do not provide financing for the two housing types combine this amendment would add manufactured housing to the statute making is there further discussion on the amendment if not of the chair recognize yourself to say that one of the concerns that i've had and i've worked with members on the other side no don't go for it i had been concerned about this previously m use more conventionally built homes but there's an economic segment where this can be very important and it very least of all it should not discriminate against manufactured housing and we did come up with a couple of areas where i think without i'm a pickle you know you should be clear that there are people who would sometimes try to suggest an opposition between conventional housing and manufacture and we think there was there was room in a sensible housing policy for everybody was that i will put the question those who favor the dome as a member will say without objection so ordered the gentleman deanna's recognized for five minutes thank you mr chairman i'd like to offer this amendment for f h a financing it deals with the clarification of the classification versus taxation as a real estate currently f h a manger mortgages for manufactured homes but they must be classified as real estate and taxes real estate the problem is that certain states classify manufactured homes as real estate but tax them as personal property when they are on leased land my mema clarifies the original intent of the national housing act stating that taxation is not relevant to the definition of real estate the purpose of f h a credit handsome is to help eligible families gain access to safe fairly priced mortgages but the tax classification prohibits many market and that program is becoming obsolete because of the trends over the last few years and the specific amendment will help ensure that mortgages for manufactured homes permanently affixed to land that is owned or least under a long term lease holder arrangement are covered by our bill the statute stipulates that manufactured housing must be classified as real estate by regulation f h a expanded upon the wall stating that the properties must also be taxed as real estate in florida for example we tax a manufactured home that is owned by the owner differently if the park owner owns the actual property so that a lot of people that would like to be in manufactured housing do not qualify for the are they do offer housing counseling services that one of the major obstacles that they encounter is encouraging individuals at risk of foreclosure to reach out for assistance before it's too late my m m it simply provides that an individual who is sixty days delinquent on the higher risk mortgages will receive notification from a housing counseling entity informing them of the full closure prevention counseling services available to them this ensures that those at risk of losing their homes and in turn their savings and credit status are given the information they need to take advantage of the available foreclosure prevention counseling services this information make can make the difference between someone losing their home or utilizing the information provided and seeking assistance i want to make clear that my image does not require that individual receive foreclosure prevention counseling my m m it simply provides borrowers with information on how to seek out these services when result to say the question of counsel and very important does not make and i want to make clear people understand this does not mandate counseling it mandates people knowing that counseling is available has been resistant to mandating counseling and i think that's gentleman we want to make clear this does not mandate counseling on the other hand it has been an overwhelming consensus from the regulators from the consumer advocates from one hundred that counseling could be very helpful both three and post purchased it is now clear that one of the things that we should be doing is encouraging people who find themselves in a difficult situation with a mortgage to get counseling and in fact i will be offering a memo later that will increase the amount that's available to hud for counseling but what the gentleman does is to mandate that people know that counseling is available i think that is a very good idea that there's no further discussion the vote comes on the member of the general of new york well as a possible say i suppose no the ayes have it and the members adopted i will now offer the amendment on controversial without ideology and without necessarily being partisan i understand this and let me say first of all this is not last time we will be dealing with the role of mortgage brokers indeed i think the role of mortgage brokers will be dealt with very prominently when we deal with legislation involving shop find predatory lending and there have been some criticisms of mortgage brokers is also clear that mortgage brokers have played a very useful role in expanding people's acts yes to credit we will later i hope be adopting some legislation in conjunction with sub time that will create some national rules regarding mortgage brokers one of the anomalies we now face is that whether or not they are regulated is uneven and i believe it is appropriate to do that but with that in mind we many of believe that we can make better use of their services in the area of the f h a because one of the things we have with the f h a is that it will be especially after this bill is passed and whatever form because i think it's where there are differences between the parties subject to ordering requirements this amendment offers an alternative way for them to qualify by posting a bond the focus of often very small operations or even cost can be expensive this tries to with safeguards provide alternatives for them to be involved now i know we're going to be hearing late of mothers in there have been arguments that presumptive in the minority community substitute a bond with the appropriate study of the impact of that seems to me a reasonable approach and i do know there are some in the consumer community who are concerned about brokers i would point out that it is our expectation that as this bill works through the process so will national legislation that will be setting rules with regard to mortgage brokers and of course could be said maybe it could have to be said but if nobody said anything that didn't have to be said we'd have adjourned about valentine's day and the fact is the great majority mortgage brokers are diligent thoughtful people who perform an important function there are as in any area people who abuse and yes we will be dealing with the with the abuse problems later on but we do want to take better account of what they do know is there were further discussion again when california mr chairman i'd like to thank you for the way that you have handle this somewhat controversial issue  when we passed the first piece of legislation on this committee they had been some discussion about eliminating the auditor requirements and substituting it for a bond and somehow it kind of got lost and then it was brought files and see another kind of things that we needed to to take care of and when mr graham brought it to our attention that that perhaps could pose some difficulty by minorities who have just such a terrible time that very good people can choose but in addition to that we can track what happens with those who choose auditing and those who choose binding and i think that's hobbes everybody's problem and i'm very pleased to support the amendment at the same time i do have concerns about the amendment and i guess my concerns are timing concerns we've all read the papers in the last several months where  a lot of our sub prime mortgages have been actually are predatory and on occasions as is the chairman said the vast majority of mortgage brokers are honest but there are some bad apples out there and there has been misconduct by a small number of mortgage brokers it impacted a much broader group of americans and is a result a lot of those are losing their homes and losing the the money they put into those mortgages and this amendment does away with the audit which is really now the only to maybe the only effective way that the that the federal government has to to monitor or really  plus the chairman and i received a letter may second from the mortgage bankers and from the american institute of certified public accountants and the american community bankers which oppose this amendment and they felt that it was a loosening of regulations on mortgage brokers and that it was an appropriate they point out that the seventy five thousand dollars surety bond that has to be put up isn't but maybe sixty percent of the average average joe face value of these loans so it doesn't appear to be enough money to even cover one bad loan if however and i think the chairman what he said is that we're going to address some of the the predatory lending and whether the sub prime abuses the predatory loans we're going to address that and other legislation i have would hope that the mortgage brokers in the past they have have they opposed legislation that i wanted to introduce last year which i think would have prevented a lot of these predatory loan loans from being made mortgage brokers oppose that legislation and while they're up here today in some ways some ways not in my mind listing right there regulations on the hope that they will be back up here when the legislation that the chairman talks about we start considering yet that they will be out here and agreeing with and agreeing that there needs to be a certain level of supervision and regulation over mortgage brokers and with that i  the generals in texas go on through the amendment does not take away the secretary's ability to review applications to participate in this program and that it does allow for those mortgage brokers or brokers to put up a bond in lieu of  and i think that this this bill begins to do that also gives the secretary quite a bit of latitude on evaluating the program coming back in reviewing the effectiveness of this program and as the chairman said you know it does not address predatory lending nor should it i mean that is a discussion for another day what we're really talking about today is providing an opportunity for people to be able to help f h a become a more relevant player we've been talking about affordable housing having access to people that can counsel and work with and help people get the american dream and that's helped them originate a mortgage makes a lot of and so i appreciate  confusion today's mortgage brokers originate the majority loans this country a mortgage banker is the one who makes a loan in underwrites a loan huge huge difference surety bond we're talking about replaces the audited financial statement required currently that they have to show a net worth of sixty thousand dollars but understand that's a point in time when the audits taken once the audit certified the money can be transferred out of that account and there could be nothing there the surety bond is for seventy five thousand dollars and it's always available and always attachable the day after the audit that the surety bond might perform on the mortgage broker that the surety bond takes place and it's in full effect in force to at that period of time so it's a better guarantee of financial liquidity and availability than the audit would which is just a glimpse in time this this amendment does more than that it goes on to say is still would still be governed by contract agreements with their respective f h a approved lender they would be required to be state license and thus remain subject to any state binding requirement criminal background check and education requirement and they would be subject to any additional  the secretary deems necessary and appropriate so what we're doing here is going beyond the norm that exist today requiring a more stringent requiring more authority for the for hud and it also places a burden upon the surety company that currently does not exist once a money is transferred out by the mortgage broker if they decided to do that so what we're doing is creating true accountability true liability and a true asset there should something go wrong and stand  surety company is going to go in and audit this individual or the firm and determine if there is a safe group to write a surety bond to so i think we've covered their requirements to make sure that safety and soundness exist and i would ask for and i've only women that you go back the general from texas thank you mr chairman mr chairman i have an amendment to the amendment at the desk number thirty three they have a well defined niche and we want to of course make sure that they have an opportunity to continue to participate in this process our amendment will enhance not only their opportunity to participate but also will give consumers some additional protections and this amendment will safeguard require the mortgage brokers to safeguard and account for any money that they may handle from time to time their escrow funds and deposits that they may have in their possession this amendment would require that they say safeguard and account for these monies the amendment would also follow require them to follow reasonable and lawful instructions from the borrower that's not requiring an awful lot but there are times when persons do deviate from the desires and wishes of a borrower it would also require that they act with reasonable skill care and diligence and the reasonable this standard that we are talking about is one that has been referenced in graham leach bliley i would also indicate that it would make require them to make a reasonable effort to secure a mortgage loan rate and payment terms that are advantages to the borrower a lot of consternation has developed around the notion that many borrowers get rates that are not advantages to them at least we would put the borrower now in a position correspondent to be considered a mortgage broker so what applies to the mortgage broker applies to the loan correspondent it would also require duties and standards of care created  be waived all of these duties and standards cannot by agreement of the parties be waived and finally it would allow the secretary to terminate the mortgagees ability to generate loans under the f h a if the person mortgagee violates the terms and conditions imposed and i would ask mr chairman that sub paragraph five be deleted from the amendment to the amendment probably limiting ninety seven percent of the market that this should apply to and we're only looking at f h a which is i just don't believe appropriate when we're dealing with specifically one item at a time this should apply to banks community banks lenders m b a s the council certify statements from these groups and that i think would be a very plausible amendment that point in time but we're dealing with a predatory lending amendment and we're applying it only to an f h a bill and i just would rather see it applied to the proper perspective perspective into the proper bill and i just don't think this is the proper way to do it piecemeal but if we would do it all at once i think it's aptly a great idea and a great approach all in back time i recognize myself to say that i agree with the dome in part but i think i may disagree on the conclusion that i agree that this is later legislation but i think it frankly does some good here no harm and i would say this is a somewhat controversial subject that members know that many of us would like to see the brokers included there is some consumer concern my recommendation to members they are obviously free to take it or not is it if you want to see the underlying amendment get accepted this will help it i think it does no harm i agree with the points made by the duncan of one particular i could understand concern about some been the general for a while i too have concerns about this amendment because it potentially sets up two sets of regulatory standards were mortgage brokers are already regulated it's true that there have been some abuses like in any industry by mortgage brokers but if the standard is ultimately going to be that we're going to use twenty twenty hindsight as interest rates change and go up over time to hold brokers who are in between the borrower and the lender who has its own set of qualifications to qualify for a loan twenty twenty hindsight that a bad market or perhaps just simple financial illiteracy on the part of the buyer borrower i've got a big problem with that i would rather see a study any of the impacts that mortgage thank you very much mr chairman and members this bill has my name on it and i would like to make sure that every aspect of this bill is such that i can support it i support this amendment and i think it would be wise for the members of this committee to show that you understand what is happening out there in the marketplace at this time this amendment does no harm but it certainly shows that we are paying attention that we have unprecedented foreclosures and they are not about to stop i came on this committee following the ethanol debacle and probably the reason i'm number three on the committee is because members ran from the committee after they had the opportunity to provide some safeguards against that debacle and they just kind of failed to do it because they had friends in the end the story they thought people tried to do their best they had all kinds of reasons why they were not tougher and they did not put more safeguards in legislation we have an opportunity to do some good here with the f h a bill and we're going to open up some opportunities and f h a is going to do it right and we're going to attend to those person we have been thrown into the subprime market but at the same time at the same time we can show that we are aware that there are problems and that we want to do everything that we possibly can to address those problems this will remind folks this does no harm it will remind the brokers pay attention make sure our underlying bill i want to keep it so that it is not offensive and i would say that a mortgage broker is somebody that i retain to give me qualified for a loan if the underwriter the person is going to hold the mortgage or sell the mortgage is the one that has all the interest in making sure they don't loan money to somebody that can't pay it back the borrower is in the best position to know whether they're likely to be able to pay it back or not the mortgage broker is retained to pursue the best financing available and to give me a loan to get into a which this unintentionally may do is to suggest a mortgage brokers that if they get a client qualified for the loan the client can qualify for the mortgage broker may somehow be held liable responsible or lose their license i think what you want in a middleman is somebody that will match the lender to the borrower not somebody that's going to independently vet the appropriateness reclaiming my time i understand what you're saying and certainly as mr frank has said we're going to be addressing these issues of predatory lending and more ways than one but to remove the person who many of the bars particularly the low income borrowers are depending on to have of guide them and to help them to understand what is best to do it is a mistake just ignore the importance and their influence and again this doesn't hurt this is simply a way by which to say to the brokers we think you are valuable and we think you do a good job but the most part we want to keep you buyable in this market but we want you to understand that we all have a role to play and you have some how they review all that's put before them so simply what we're saying is we're not blaming you but we're asking you to accept even a little bit more responsibility in making sure the bars are protected we don't player in the lending market my amendment and along with mr franken in others are trying to provide an opportunity for folks to originate those loans to make more availab appreciate the gentleman striking section five about i also have a problem with section four because it says that to me that is a suitability clause and i think we go down a dangerous road when we start trying to put the someone to determine what is a shoot a bull mortgage for client what i'm afraid of and i've experienced this in years past when i was originating mortgage loans we had different lenders that we would  originate loans for and if one particular lender or one particular type of loan was over prescriptive we just didn't originate loans for that particular entity because it was easier to do it with those folks that had a more  uniform requirements and so i think we this is certainly a discussion that we need to have when we talk about predatory lending and that would make it applied to a broader range of people that are originated loans but in this particular we're just a limiting it to the gentleman from california said just to really about one percent of the folks that are getting loans at this time a deal to the ranking member of mr ba i believe that really this provision would probably be construed as a not only as a suitability standard but also  also appears to make enough given affirmative duty to to steer the client  is amendment but you know it last year when i was trying to put together when i was trying to put together some standards for brokers we really didn't go as far as this but this this actually it is a pretty strong suit of l d standard which actually appears to give a firm date duty to the an attempt to inject justice in it but i yield back to bounce my time to the gentleman from texas from you sometimes i thank the gentleman for yielding mr chairman let's start with the notion that this is the wrong time to start you don't get to the super bowl by playing all of your games on the same sunday you have to start with one game and if you move beyond that one then you go to another this is the genesis of what we may move to it is not the end game game revelations are yet to come i would also add that in addition to acorn we have the center for responsible lending supporting this the consumer federation of america the national council of la raza the mortgage bankers of america the national consumer l center the national association of consumer advocates this is being done at a time mr chairman when we have two point two million americans with sub prime loans that could eventually lose their homes we have one point two million foreclosures filed in two thousand and six it is estimated that one of five sub prime loans issued during two thousand and five through two thousand and six will fail i think the american public expects us to do something to assure that the brokers who do help and who are have a meaningful role but that they have some standards that they have to add here to such that we don't find ourselves slipping back into the the enigma that we're inclined to agree with the a member of take me paragraph four which was noted and substance procedurally though i do think some of our friends on the raised objections have a concern that is we move with paragraph and i do understand people saying well we've not had a hearing on this i mean it's different than the rest of the bill if the gentleman would agree to it you know sent to drop paragraph four at this point i believe we would resolve a the gentleman is now free to work with members and i think we may very well see a very foolish when we get to the floor on the other point i would make is that we do is a said before tend to be dealing with this in the broader context and so we will begin with this not just with mortgage brokers but with so i appear that what that language is being advantageous to the bar i will guarantee they're going to be people who would sue because they had a mortgage rate at all that they had any right and those would be frivolous lawsuits but a business is subject to those what so what you would actually do with this if you did not remove that paragraph or if you would tend to chill the market that would even help people and so rather than picking up the problem and trying to solve it people say najla section four would bring me the lawsuit we find in the mexico so that o b g y n for leaving the the the district because of the potential of a lawsuit so that in some of our major towns in the second district we don't even have people who will take baby cases anymore because of this fear suit and so i understand where you go i think we can get there i think chairman suggestion that you're not going to lose much ground by dropping for we're sending the message that people should be very aware of the service of trying to form and so i think it's you're getting the spirit of without any great loss and you're not going to chill the market quite as much as war when i was young with elan you know i accept the statements that have but one question is this an indication that the jump on that would now support the amendment yes not i don't mind supporting them an amendment because i favor what you're trying to do nobody wants to see the predatory lending but i would say there's almost a trillion dollars out there lent to to to borrow rs with without full credit histories and what we're going to do if we're not very careful we're going to eliminate not just the predatory practices that are a damaging to individuals but we're also going to limit the loans available for people who just need a foothold and to get started in the markets and i think the the overreaction should be watched for as much as the protective responses that you're giving but now i'm i'm comfortable one that's the only part of a circle that the gentleman from texas would withdraw the entire amendment and work on it before he did the floor or conference i just think that there's still too many questions what reasonable means in  two and three and i just think it's it's too doesn't have the legal requirements what's reasonable the definition i don't know where that is to determine that  that the duties created shall not be waived or modified that means there is no no given this right i just think that since this discussion that i i would appreciate in withdrawing it to consider later question if not the question comes discussed that we had a great discussion about the bond as opposed to the audit and as you represent it you are giving the brokers an opportunity to choose which they want to deal with and so this amendment would ensure that on page two line four sorting after lender or a mortgage broker would do that it would make sure that they have that option and i think that would take care of our concerns about those mortgage brokers that would not be able to acquire a bond because of problems in the bond market so with that i would ask for and i vote you know back the bow is a further discussion if not the question is are many amendments yes i  support the gentle lady's amendment but i really when we are having these foreclosures of the mortgage lenders and mortgage brokers five of them have gone out of business and  i really want to know why in the world are we taking she's adding that you can do the audit or the surety bond but why in the world would we take the audit away when they have not been performing up to a safety and sound standard and the surety bond of seventy five thousand is really not enough to cover the average cost of the f h a loan with a gentlewoman you know it's more risky well let me just say this and there was an extensive discussion of this some of us wanted to make sure that we were doing everything possible to ensure the safety and soundness in this market we added to it the audit so that it would not absolutely be excluded so that  support adding the audit or the or the surety bond my question was why in the world take away the audit requirement and the end the underlying bill even if it's a choice because of this  eighty's amendment when there have been so many foreclosures and riskiness in the market and this is coming from this segment of the industry which is at this point not regulated as i know the chairman is moving forward with legislation  also the surety bond that is required in this legislation does not even cover the average cost of the f h a loan so it becomes a more risky safety and soundness issue and i have concerns about is  security industry the minute you do this where there's only certain sector goes the security bond that would skew that portion in this audit requirement the language here is stronger than current law in our original amendment because it this i have great reservations about simply removing the audit requirement and having a bond and i have great reservations about that however in the interest of trying to respect all of the concerned i simply did not oppose that but offered an amendment in support of what mr frank had already agreed to do to have an either  now if you're saying to me that you think that that somehow all harms what you're trying to do then i'll remove our support for removing the audit but i just don't think that what we should do surety company in the world this going to issue a bond to a risky group or an individual they're not going to do it they're going to their own artists are going to do their own research to study and once that's true the bond is issue is attachable once you have a financial audit release the next day the money can be transferred out and there's nothing left nothing at all so this journey bond is something that's attachable it's not revokable and it's is there and no surety bond company in the world is going to issue a surety bond unless we have a good client  when you talk about adverse selection let's be explicit the motivation for this amendment is the history we have in this country of minority contractors having a harder time getting a bond than other people we are talking here about the question about brokering well black and we are talking about people running into that so when you talk about adverse selection the most adverse of all selections is that which disavow acts members of minorities the reason i think that's relevant is  it is after all people in the profession who have generally told us they would rather have the bond as an alternative to the audit it seems to me unlikely that anybody who had a chance to get the pond would choose not to get one and i do say to my friend in this case except the testimony of my colleagues that we have made progress in this country diminishing wages and we have an extra paid it all together and that's what this is for now we ask that we work together and of course gemma california thank you we have a real problem here and that is we have really small businesses in gauged in the furnishing hundreds of millions of dollars of  credit you can be a small mortgage broker if you lend money on fifty homes you've already lent you know tens of millions of dollars so either of the approaches does not leave a whole pile of money if if if a small mortgage broker defraud to dozens and dozens of homeowners the average small mortgage brokers not going to be in a position or have the assets to make them whole are choices between an audit on the one hand and a surety bond on the other as an old auditor i would vote for the surety bond the surety bond means that there's at least the seventy five thousand dollars in there on the day that the whole thing unravels on the day when water more borrowers has a claim and as the gentleman from california points out an audit at best says that there was a quarter million dollars in equity but that quarter million was as of the end of the last fiscal year furthermore that equity may be cash but it may be other things that have a tendency to evaporate or not be sold for their full value a mortgage broker might own their own building and it might be worth a quarter million dollars at the end of one year but maybe you can't sell it at some other time so i think the underlying problem which is whatever it is whether it's net worth or whether it's a surety bond it's going to be a small amount compared to the total amount of loans but that that the surety bond offers consumers at least something and then as the gentleman of california points out the surety bond company will do its own investigation before it issues the surety bond the one thing i'd like to work with the chairman on as we move to the floor is to perhaps have a higher standard for those for those mortgage brokers that are quite large so that if a mortgage broker is doing say over one hundred million dollars of lending business that that mortgage broker would have to have either a higher net worth or a higher bond the general you know i think that's a very reasonable approach consumer with a claim i'd much rather know that there was a seventy five thousand dollars surety bond i could get my hands on the gentleman yield than a quarter million dollar net worth audited as of the end of the last fiscal year many months y i meant to say that mortgage brokers are involved in the process and that you could have claims against a mortgage broker for tens of millions of dollars in whereas mortgage brokers are generally very small companies is there for about to have some votes when we do have consulted with the right the member we will break for an hour and a half we are making good progress i appreciate this will be able to finish today seems clear so that we will take the votes over two or three  and we will come back an hour and a half from when we break so members can vote and have lunch and satisfy their staff who are going to be pestering them with all the things they didn't do well they will by just waiting  five minutes this this amendment seeks to address a very large problem affecting single parents and working families that they face every day and that is the crisis and quality affordable and available daycare a daycare is not really being supported by the government city state or federal and it's not being supported by the private sector it is a crisis in that well over the majority of women in this country with children have to work in order to to support their families and yet there is no childcare but child care that is emerging is what's called licensed family daycare centers and these daycare centers exist in existing housing in new housing and apartments people turn their homes into a neighborhood daycare center licensed by the state and the city and what this bill does is that it works within the current structure of f provide an incentive for for daycare and it provides the program for think family homes which includes new existing rehab homes as well as condos which is the form of living in the district that i represent and it allows for a twenty five percent increase in the f h a loan cap if a qualifying home includes a life and day care center it is a way of providing incentive for the creation in support of building more childcare centers and helps with this social goal of providing affordable and available daycare this builds on a program that really mr baker and i have worked on for many years of trying to figure out how we can through our housing programs provide more daycare i yell back the balance of my dairy further discussion on the amendment  i would think this is one that would be broadly supported it does there's been a lot of concern that the bureaucracy was somehow not considerate enough of homebase day care this is an amendment that clearly facilitates homebase chairman i'm trying to find my note here for the second year there is a proposal to increase the f h a multifamily mortgage insurance premium a fee increase would lead to higher borrowing costs for multi family property that would be passed directly on to renters through higher rent at a time when we're trying to increase access to affordable housing there is no evidence that charging a higher premium for moderate income housing would serve the nation's housing needs the administration's fiscal year two thousand and eight budget asserts that the new f h a multifamily construction program will generate the same production volume despite a thirty five percent the increase unfortunate out believe this is the case demand for f h a insurance programs is highly elastic as fees rise lenders and borrowers use the program less the federal credit reform act of one thousand nine hundred s and acted to ensure the government's insurance and guarantee programs either cover their costs ruthie's or if this is not possible that congress would separately appropriate funds to cover any shortfall these programs should be self supporting but congress never meant for these insurance and guarantee programs to generate excess  income so today mr chairman i'm offering a simple and straightforward amendment to deter efforts to increase the mortgage insurance premium on any of the f h a insurance programs to generate revenues other than to cover the cost of insuring the programs themselves the a new section twenty four to the underlying bill that simply states of the mortgage insurance premium for any program out of the national housing actual not be increased above the level in effect on october one zero six unless it's demonstrated that without an increase the program would require appropriation of credit in accordance with the federal credit reform act of one nine hundred ninety if such an increase is determined by the sector to be necessary public notice and comment must be provided prior to implementation of any increase in this language mr would prohibit increasing the previous above levels currently in effect unless the increase is necessary to cover the cost of the program and to avoid an appropriation of funds demand that would also provide an opportunity for public notice and comment if there is a determination th premium needs to be increase mr chairman this amendment will help focus the f h a loan programs on their ultimate goal which is to provide americans who could not of the why is a ford with a path to home ownership this and then that is good policy it's a way frankly of just generating additional funds for the for the treasury and i think it's one that would be broadly supported by the by the users of the program is there further discussion if not to question it on the a member of it by the gen fundamental question of the fund which i think it would make sense to deal with there are several amendments well to do that i have one of the gentlemen he has one of the california as one of the general no noise you know in texas so that would be that one cluster of amendments to be dealt with when we came back so that's acceptable i would recognize the gentleman from illinois to offer a member twenty eight is that acceptable i would prefer to start with the substitution well then i'm going to hold up because that one of course gets into the whole question of the fund i thought the last one was a narrow one so we will hold off on that  well that also was part of the lia member from texas is part of the whole issue what if we went with twenty five for which is twenty five i don't have it down here oh yes i will offer a member number fifty two colleague from michigan mr dingell represents the city after any there was a project in that city which was in progress at the time and there was an undue delay in the paperwork this is a project that is identical to those that were covered by the grandfather i believe could have been covered by the grandfather there was a paperwork later this simply extend to that project in ypsilanti the benefits of the grandfather that was in fact adopted and i just want to make very clear the process had begun before the date this is one that could have met the date there were paperwork like yours and that's why i offered to preserve and on the subsidy we were asked to do year didn't get through committee but went to the floor it was done on the bill went through the floor and in essence what the bill does is to say it takes a look at the situation to realize that in this legislation last year in this year as well as that we're making some changes to the bill as far as a down payment requirements and the like and we realize that under certain circumstances and clearly with the testimony we've had here with the situation in the subprime problems and what have you there may be circumstances when the entire market i'll use the non technical term sort of blows up and you have problems that we should maybe step back and roll back some of these situations particularly the high risk lending and the subprime lending where it was before and allow for the secretary to step in and say let's put a slow go slow approach on this before we keep on the current path that we're it we've engaged in and so what this section what it does in essence is suspend section six seven and eight in this bill would change back to the current status quo ante if the secretary provides a detail report to congress with the reasons for the drastic drastic being defined as a ten percent which is pretty big increase the tender current increase in the defaults on these mortgages so when you have that big of a cataclysmic change in the  marketplace really we should stop it and say let's take a breather here we also include at the very end of the men at the same language that we discussed that last year and that was because you're going to certain areas like when katrina was happening was all the discussion last time what happens then well those before we didn't we only got into it a little fine tunes on the bill and said hey that's not there so let's well ok but i don't think any harm will be done if we wait an hour and a half and so i'm going to i would ask unanimous consent that when we reconvene this be the and the general new jersey be entitled to his five minutes at the this these remarks will not be deducted miss cheriton yes can i just clarify this is this a member of what i'm hearing would do away with the no down payment requirement w hour and a half i hope members will come back probably we will have this amendment to deal with we will then have the significant debate over the fund that's about all we have left but i will give it a couple hours of a good debate on that and i appreciate the speed with which we've worked and the meeting is in recess until ten of to my right ten of two yes five minutes thank you mr chairman what this amendment does since redo what was in the original bill or i should say the bill that came out of committee or out of off of the if you do have a proverbial meltdown in the marketplace and as she put it members fleeing there from the committee to try to address the situation that you have something in the language of the legislation to rectify it to add some stability to the situation until we can come back and fix the problem so all this meme and again as i say the can do what we did on the final version of the bill as the house passed pretty strongly on the floor last year is to say that if there is a significant increase in defaults going through the system that we will return status quo ante go back to the original or the current law and require that the secretary pour to congress as to the status of the situation and allowing congress then to take any remedial action that may be necessary to solve the problem in the marketplace what we want to try to do at the end of the day is to make sure that any of the positive changes that we are making here will not have a negative impact and i don't think they necessarily will but if there is any negative impact that there is an automatic trigger if you will to make the changes that g philosophical position or something that we are making this and then and absolutely that's not the case maybe you can make that about some of the other ments sometimes there's not a philosophical one this is just a technical amendment as far as making sure that we have some protections in the bill to  address any blow ups in the financial markets that we may address in the future and with that i'll yield back i recognize myself in opposition to the amendment i will leave to administrator was a good thing this would cancel that if there are problems at least for a certain period not caused by in other words this does not say that if the experience was zero down  payments very negative we stopped doing them it appeared to say there are problems elsewhere in the system unrelated to the zero down payments that they should be should spend until that problem is cleared up that does not seem to me to be a  even under this amendment even if it's working quite well there is a good deal of repayment it still gets canceled so for that reason i am opposed to the amendment is there further discussion on the amendment with the gentleman yield i appreciate the gentleman argument clearly one of the alternatives could be that if you have that significant a change in the marketplace we could have proposed an amendment that the entire system lending program  be eliminated and in stop altogether i think that i think most would agree on both sides of the aisle that would be the too draconian step to take but i like the testimony we just had a couple weeks ago with the problems in the subprime market and those are the areas we're going to probably most likely see problems occur first before the more middle class of the upper segment of the marketplace those are the areas where we would like to have some degree of a protection well i would if i would just take back my time but the zero down payment is not limited to people with serious credit forefront of our everybody's mind and it was a question in the original version of r and then meant that what happens in those areas do you want to have problems totally unrelated so and so forth so we kept those languages in here even though katrina is now fortunately behind us to some i digress briefly from my planned amendment and simply say i'm very pleased that we passed by voice vote the i'll see bill earlier today and i hope that the chairman will work with us as the process moves forward i'm concerned about a number of different businesses that have reasonably relied upon the existing status quo and making investment decisions they haven't yet gotten to the point where they've got and let me say to my friend i'll be glad to talk about that let's move on to this real we thank mr chairman we did talk public among others the american association of retired persons became quite concerned that with these reverse mortgages available to senior citizens some of the senior citizens might be taken advantage of with loan origination fees all this amendment does is kept the loan origination fee at no more than two percentage points and it does a few other things but that's the essential message here it's intended to protect senior citizens from being are expanding the program here i think it is important for us to look at the pricing and there may be some other questions that will come up but i think it's important to begin from this we haven't had a hearing on the  the you're talking about origination fee but this would not for example if there was discount points involved in this loan would not impact this i do not believe that this language impacts discount points the focus is originat slowly accept secure forms of identification had already published guidelines for residency and immigration status but this amendment further strengthened and clarified this process in order to secure an f h a loan the amendment would require either a foreigner s passport a citizenship and immigration services photo id card or social security card in conjunction with the state or federal id these forms of a dentist consider the most secure type of identification because they're harder to forge and harder duplicate they're all issued by a government agency which has more checks and balances against illegal immigrants criminals or terrorists from attaining these documents everyone who is in the united states legally can easily obtain one of the three identification forms but it is difficult for illegals criminals and terrorists to go to like the steps to obtain one of these i think that there are of several instances more than several numerous instances of where mortgages have been now need greater clarification which this amendment does we should not be operating under obscure parameters that do not serve our nation i think we can strengthen these regulations to help protect america and i urge the support of this commonsense amendment and i pearce thank you and mr chairman our amendment simply deals with the problem that we're finding all across the country that honest taxpaying citizens sometimes don't have access because there's no funds left on programs my district is right on the southern border and we have a forty seven percent hispanic but i continually hear from a spanish who are saying that that the illegals are taking the services that are intended for us and we're paying taxes so what we're doing here is a fairly narrow fix to the problem that that exists and we do it by simply requiring secure identifier cation in order for an individual to receive loan this will include foreign or u s passport citizenship immigration services c i s photo id card or social security card in conjunction with the state or federal id government  can back programs must be accountable for whom they serve and to whom they provide benefits requiring secure a dent of cation upon application for government back along is common sense standard to ensure illegal immigrants criminals and terrorists are not taking advantage of taxpayer backed f h a loans recently cannot donahoe the u s inspector general of the testified before the house appropriations committee on march fifteenth two thousand and seven in which he stated the o g is seeing a trend with organized groups in some parts of the country recruiting illegal aliens to purchase f h a insured homes this group is often preyed upon by unscrupulous mortgage professionals who assist illegal aliens in obtaining fraudulent and stolen documents the too frequently these borrower soon realize that they are unable to bear the periodic costs associated with homeownership and their loans in turn these ever increasing defaults degrade entire communities where the organized groups target their efforts as a result of f h a s continued pattern of deregulation or inconsistent and forced munt of its easy for americans and those who are here legally to attain but difficult to duplicate or car illegally tightening the identification standards will alleviate this problem which hurts americans and hurts the integrity of eight rating system so that they can receive the same benefits as others who pay their bills and acquire loans right now mr chairman the rent utilities insurance payments these are forms of alternative credit history that are not being considered and this bill will allow this along with other information to be considered by the secretary to determine whether or not a person's  credit worthy and we are asking to set a secretary to develop a system and there's a sunset provision in the bill five years after the system has been tried and g a o has given us a report not later than two  years we can make some determination as to whether we should come to new with the the system so in essence it just gives us an automated process such that borrowers without sufficient credit history not credit but credit history they too can  there further discussion on the gentlemen's amendment i will recognize myself to say that i think this is an important principle we should be working with it does make it about a program it does i believe give the secretary and through him the administrator the ability to do to deal with it appropriately but as we know that there is issues kind of a catch twenty two some people are in which is that never having had credit they can't get credit and what we are talking about is some ways so that people who are limited income but who have been very responsible paid all their bills can break that out of that kind of cycle and this relate to the question of housing fun we have one over the city outstanding that not directly related to that and that's the remember that i now call on the gentleman lloyd to offer without objection awarded to the gentleman from illinois recognized for five minutes thank you mr chairman a section ten of the underlying bill authorizes the secretary to require pre purchase counseling for zero and lower lower down payment powers  created discrimination by zip code and then chicago and then in chicago there's a bill in springfield that requires powers counseling based on selective criteria in order to avoid counseling consumers have avoided buying in loan loan to avoid the hassle or cost of counseling if they have f h a bauer's are required to have counseling they may simply choose not to buy a home this completely defeats the purpose of f h a in this f h a modernization bill  might say that the proposed legislation could be considered discriminatory those with poor credit or little or no money down are forced to go through f h a and thus have to go through counseling those who does not need to go through f h a to obtain a loan are not required to have counseling finally i would add that there is a shortage of concerts especially in certain areas of the country mandatory counseling increases the time will take to get a loan approved in the chicago case i mentioned earlier the pilot project applied to just ten ten precincts in the cook county and the waiting period was at least one month if the pilot is expanded to include the entire county of cook as projected that one hundred thousand purchasers each month would be forced into counseling and of course the question of who bears the additional cost for counseling should be thoroughly vetted while the underlying bill only authorizes the secretary to require housing counseling it still opens the door to required mandatory house counseling then i don't think we should pass the buck to the current or any future secretary and we should not turn house counseling into punishment and i don't think that we should assume that low income means low financial intelligence many of you in this room know my colleague ruben you know hosts and i formed a financial and economic literacy caucus in february of two thousand and five and to date we have fifty six members many members of this committee are members of the  worked on a bipartisan basis with the administration and hundreds of public and private sector organizations from across the country to promote financial education which includes housing counseling however i am a strong believer in the phase of phrase that you can lead a horse to water but you can't make them drink the secretary requires a power to receive housing counseling that may discourage the bower from using the f h a we don't tell grocery shoppers to consult a nutritionist before making a purchase we  require the f d a to issue food labeling guidelines about nutritional content so that can consumers can make an informed decision however this is not guarantee that consumers will make a healthy decision in the same way requiring a borrower to undergo housing counseling doesn't guarantee that the consumer will act in a more or less prudent manner when it comes to buying a home but making the consumer aware of his or her options for housing counseling and providing that the consumer with added adequate disclosure gives that consumer the that role is really played heavily by realtors now not all do such a good job but i think that in some instances they would need to have the house lead counsel again my m m s strike section ten of the bill which gives authority to the secretary to require chairman and members i rise to oppose this amendment i know that my colleague on the opposite side of them is bigger it means well and i listen very carefully  to the reasons that she gave but i think that the most important thing that she said was that this gives her the authority it does not mandate anything it does not say that god is given the power to force anybody to do any counseling so that's number one and we should focus on that that this is authorization they can he can she can our cannot do that secondly again this committee has been focused time and time again on what has gone wrong in the subprime market we have talked about this in several of our committees all coming up with legislation and ideas about what we can do number one to stop the increasing number of foreclosures number two to help the people who have been harmed already who are losing their houses and to prevent people from losing their houses in the future and it seems to me that this congress and most people who are involved with home mortgages have accepted the idea of counseling as a matter of fact it was the financial services community bed help to promote the idea of counseling when ever we have dealt with predatory lending as a matter of fact they get c r a credit for counseling and so we have all of these financial institutions and people involved in this industry who have embraced counseling over and over again who have supported the idea that counseling can make a difference given the situation that we find ourselves in now with this unprecedented number of foreclosures and the idea that counseling has been embraced as a good means substantial way of helping people to avoid being thrown into foreclosure i would think that at this opportunity  that we have while we're reforming f h a that we would want to make sure that counseling is considered an important part of our legislation be it just authorizing or encouraging that we would want to make sure that f a a would use this as one of the two to ensure that they do the best job they possibly can extend an opportunity to those people maybe who  don't have money for a down payment for people who would be in the subprime market maybe the victim of all kind of exotic products that they would have an opportunity to have a house and so i don't buy that this would be discriminatory and believe me i keep a keen eye on everything that would discriminate against poor people and people of color and i don't believe that this will discriminate against poor people this would be helpful to poor people i don't believe will the gentleman yield of course and the reason and i agree i think we need counseling i think it's a good idea i just don't want it mandated because what's happened in chicago with this pilot pro program with the ten privilege into women agree that it's not mandated well i think that it becomes that way but i think that there's a difference between what it may become and whether or not what we're doing here mandates i this the very fact that in chicago it was only intent precincts and of course none of us here cook county precinct reduction a little shaky about what's going on but the fact it was only a ten p c it could be part of the problem the gentleman said well people went to one area rather than another the secretary of hud under the discretion here could avoid that by not picking and choosing in that way in other words i understand what i'm sure if something is in some limited areas but right not not right next  but first of all it's not mandated second of all i don't think it's discriminatory thirdly of all we're in an atmosphere where people are losing their homes fourthly we want to encourage f h a to do everything possible to prevent the bore closures that we used to coming down  help people and i don't think by taking the authority out of the bill to allow for counseling will help to prevent us from providing a safety net for those people who really do need some help so it was expanded because of the discrimination of the ten precincts to the entire cook county now cook county is you know chicago and and the surrounding area and now they said well we'll have they mandated then that everyone should have to have no matter what and so that now there is a worry that there are there are no counselors there's i mean this is a new business is starting out reclaiming and i have time for a month we did not mandate that the cook county at all you know to the till later from new york actually when the time but the general in california ms chairman when the secretary in effect a commissioner came before us they talked about the f h a program and the need for affection flexibility and discretion and what the language in the bill says the secretary could require in its quote if deemed it necessary and i think in some cases it might be appropriate to allow the secretary or a car counsel for some borrowers and this this language in the bill is very specific and it that only apply to those who are allowed to have zero downpayment and lower down payment borrowers and higher risk borrowers which is defined in the bill as those putting down less than three percent down and having a fica score of less than five sixty so you being very specific in this bill to who he would have the opportunity to require counseling if he so chose and i think if you're wanting to get into a zero down payment loan and you have it like a square four hundred perhaps it would be appropriate to have somebody counsel you in the most appropriate way for you to pay back that loan and what be would be appropriate for you to do at that point in time but i guess the thing we're doing is we're striking that language but in its place we put duplicate language is already required in the bill one of the base building mortgages required to be provided the bar with a list of hud approved housing counseling agencies in their area when they make their loan application in addition to baseball records barros applying for a zero down and lower down payment loans to provide written disclosure regarding other mortgage loan options an additional cost associate with a lower downpayment loan and the appreciation needed to pay off alone including selling costs and if the secretary thinks the risk created by one of these innovative new projects products  providing in the bill could be mitigated through counseling i think we need to give the secretary that authorization but in all respect i have to oppose him in a because all the minima does is strike the language that gives the secretary if he deems it necessary the right right to require counseling does not mandate it and it replaces that language of language it's already in the bill so we don't accomplish anything other than having people that are high risk loans one zero down  safety from not receiving counseling that they should otherwise receive and for that reason i think it's something we need to give them an opportunity to do specially want to to allow flexibility discretion and that's what we're trying to do in this bill and i think this would somewhat i thank the gentleman for yielding and regretfully i opposed my good friend and colleague on the other side of the aisles amendment counseling can be helpful and it is not mandatory what we're seeing now is a crisis and possible foreclosures and certainly we know that we need to stop these foreclosures and the best way to do it is to help people stay in their home and you need to restructure the loans but it doesn't help to restructure alone unless the person can pay for it and a person may need counseling or literacy financial literacy or help in restructuring the loan in the way that they can then that they can pay for it and i see that pick canceling can prevent  dislocation or foreclosure which obviously hurts the consumer but hurts the economy one report said you get fifty cents back on a dollar on a foreclosure so it's in our financial interest our public interest in our humanitarian interest to help people stay in their homes some people need more help we've had hearings on financial literacy we've had revolutions and legislation studies on financial literacy which includes counseling this is this is could be helpful to help the people stay in their homes it's not mandatory the consumer can decide it certainly gives more tools to hud to help people stay in their homes and to help people make good decisions that benefit them and benefit the economy and i think that to having counseling may prevent dislocation and disclosure so i regretfully oppose the amendment that really prevent having the ability to provide counseling financial literacy and support just think we need to be careful of moving too far down the road of making a lot more if we want to be competitive with with the private sector products we need to make sure that we don't put more things on this product then we're putting on the i think the bad experience a lot of people have had elsewhere is going to help us get work for the f h a but i would make that point i understand the danger and i would therefore not vote for any mandated counseling but it's a different story to give the f h a commissioner the ability to do it jurisdiction over bankruptcy and there is a provision in the bankruptcy code the reform bill that was passed a couple of years ago five years ago i guess because this was the five year anniversary review of this bill and whether they've been effective that requires a person before they can file bankruptcy now to receive counseling it was a requirement that has significant support from the financial community because they wanted to reduce the process when one is contemplating bankruptcy really is not serving the intended purpose that it was that it was put into the law for because  that time the person is in such financial distress that counseling won't assist them very much and i asked him about whether he thought there might be other opportunities earlier in the process to get counseling and one of the places that we were contemplating doing this counseling requirement was in the lot there is no requirement of counseling on a sub problem one of the major differences between the federal law and the north carolina law that everybody has touted is the gold standard at least for a while they were touting it as the gold standard is that north carolina law does require our counseling before you can get a sub prime loan of any kind enough carillon so there is this recognition i think even on the part of folks in the financial industry of all kinds that more education and knowledge about the product that a person is about to go into and more and earlier in the process is a desirable thing to keep people out of bad loans sub prime loans that are predatory and ultimately out of bankruptcy situations the limited number of situations that given them discretion in this case to require counseling seems to me to be a desirable thing especially in light of the number of foreclosures that we've seen experienced in the subprime industry and in response to the gentleman from texas the area in which we're trying to get f h a to be competitive  in that sub prime area in particular so that people don't end up in these subprime predatory loans so this would be the ideal area it seems to me to give f h a the discretion whether to require not to require counseling is not mandated in any way but it seems to me desirable in this particular but i did just just two things number one i think when we're talking about the counseling and the foreclosures we have to be we have to remember about the foreclosures that the federal the federal reserve study shows that los or cost of the loan and we certainly want people to be you know experienced financially and as i said i really care about the financial literacy of this country and how i need to have it but i think you know we can't get so involved everybody is going to learn exactly how you know that this is the the reason that there won't be a foreclosure is that they understand what the mortgage means so i would just like to say that i would hope that maybe you could put something in a report one adopted work with the gentlewoman from illinois to put the appropriate language in the in the report i think this is one where we all agree on the objective and true i would be glad to do that i thank the gentleman the question now comes on the amendment of the act to require that a mortgage be under an f h a insured mortgage provided a written one page disclosure to simply state the financial commitments of the loan agreement which would better educate and prepare  borrowers think of it as an executive summary of sorts on top of the mountain of forms and paperwork that must be read and signed before closing i know from my experience and real estate that you have a loan package that averages seventy pages all the information has been mandated we've mandated in law with mandated regulation and there's a mountain of disclosure statements but people know nothing about the details of it what i propose here today is a simple one page executive summary of the important things those people that are signing on the dotted line should know at the hearing on subprime and predatory lending in late march alex  the american enterprise institute recommended requiring a simple include in clear one page disclosure form which would be given to every mortgage broker bar or a week before closing and mr chairman i must c because you had a very open hearing and this is an idea that originated out of a hearing i said to you personally that it was it's very nice to have a hearing where there is an exchange of ideas it's an interesting give and take and you actually learn something which you had a great quip back he said well sometimes you actually have hearings to learn something and i can't thank you enough for for that and i think this is a regional idea it's not it's not a partisan idea and i know that some times get  get that view from my colleagues that this is a partisan issue but this is a incremental step and this is the first opportunity i've had to propose it and it originated in that hearing and there are a lot of questions from  rate changes and better prepare them to understand the future of their loan a lot of our discussion today about the mortgage fallout the marketplace has been about whether or not consumers had enough information well this would make it long this rate is good for exactly when a lot of discussion right now is when your rates go up there will be a date on this one page and will be all very concise and clear for the individual to know this on one document the number of other things that i add to it points in closing costs you know and name number and email address for for the individual to contact someone with questions and then you have to authorize it by signature but above the signature it says do not sign this if you don't understand it let's use real world language not just simple legal ease and this one page disclosure that i'm proposing would contain this central credit underwriting concept as well as a key loan terms i think this is the direction we should go in and as mr pollock stated in his testimony disclosure would allow borrowers to in effect underwrite themselves by understanding their basic risks right now i think it's important we bring clarity to the disclosure that we mandate seventy pages of legal easing garble it is not the way we should go it's not good for the borrowers it's not good for the marketplace and it's not good for public policy purposes and so i urge my colleagues to approve this amendment it's an incremental step which i think when we're trying to reform f h a lending is a very proper and good thing it's very reasonable and as i said an incremental approach to a larger issue and i hope that we can have some bipartisan agreement on this i thank the chair for that idea as well  s you can learn things we've had long we're into a lot of what it is but things do come up i will say i'm going to vote for this amendment i think it it has been pointed out to me by some people who know more about this than i that there is some overlap between this and and vesper the real estate settlement procedures act i think it moves in the right direction for example one of the things that need to work on page two lines twelve to fourteen there was a requirement that you tell you amount of any prepayment fee to be charge of it's painful had pointed out to us that they don't know that the answer is always no because one of the advantages you have a days there's no but i think it is a reasonable effort subject i would think to some to some further work i do think we should make very clear that on page four lines thirteen and fourteen in all capitals the phrase do not sign this if you don't understand it is a mandate from congress not to congress i wouldn't want members to think that they were bound by this and i want to alleviate any concerns to that don't want to add to that we want to make this to some extent replacement rather than additive and deal to them and in that prepayment penalty it would make clear that the answer is zero and so they can see for instance if they have  state but when i see a proposal do something in one page that takes five pages to describe what you're doing in one page that should tell you something  this is it and while i understand the sentiment that the gentleman i heard the guy was at the hearing when he when he testified about it too and my first thought was what we really need is another piece of paper in a real estate transaction because people don't look at the disclosures and don't read the disclosures that they are getting now  so while the intent of the gentleman's amendment is a good intent and i have no doubt about that the intent of the witness who suggested this one page or  a good intent it takes you three pages to list the things that that you would put in the disclosure and the notion that all of a sudden you could take three pages of  notion that you can get all of this on one page is just i mean that may have been just no way it can be done first of all well i don't even if you could do it it wouldn't be a good idea which is the most important very familiar with mortgage closings that understand the amount of paper but i want to give clarity which is what recipe was intended to do but i think fills that need and i think with the fallout in the mortgage industry right now the debate we have on whether or not consumers have information i think this is a step in the right direction i'd love to work with you to improve it going forward but i'd ask you there's one thing to work well for us but i think once we put this in the provides the disclosure is it at the closing is it before the closing is it three weeks out i mean there are just too many allen asked a question as to put more paperwork burden in this process to come in and mr we can read for this amendment but i do have a couple of questions that probably bought and sold well over fifty pieces of property and in my lifetime and i've often wondered about why there isn't a clear concise summary however you have to remember that people at a closing have that euphoria of i'm going to really work this property we to make sure that that it's significant and that they do read it i also ask the question at what point would this be given is it at the closing and i will yield to the gentleman from north carolina answers at the closing or is it at the time of the loan application it would be at or before the closing after loan application after underwriting as the final document is prepared so it could be the day of the closing or before i would say gentle lady you i do have some follow up questions i would like to ask and then if there's time left i will yield now on the the but i did it in a nice matter one of the things that we want to make sure of is that it doesn't act as an excuse for somebody not to go forward with the loon just you know can i think the question needs to be answered can i just get out of this if i say i don't understand by not signing it am i still obligated to go through with it and how much additional information how much additional education would there be with this image i think it's a good idea i do think that it needs more work that when i will yield to the gentleman from north carolina to answer i would tell you that you are committed to the loan based on your early commitment and you r down payment and the earlier acts that you take as a bar or this is just part of the final disclosure statement just to ensure that you understand what is also in the lo package all this information is within the loan package we then take it and lift it from all those individual papers which you know thousands of pages and i understand the euphoria aspect as well being a consumer and going to  when respire first went in place how many lawsuits there were just because of response and i just want to make sure what we're nowhere doing here is truly a consumer service and one that is not going to just be unhappy that becomes how to do it later rather than work out of the question is what legal consequences ensue from a failure to sign the don't sign it if you don't understand it are there any consequences if the person have something i missed what are the passing a law that has a a question that somebody in the contract your best sign it does seem to me we need to know what the consequences would be legally of the failure to sign well will have to find the consequences for the underlying contract because this simply adds a page to an executive summary of sorts i mean so in essence this is the same thing as signing the contract but the answer is yes but your real signature was on the contract so you're bound that's problematic to me you are bound by the underlying contract but when you sign the executive summary it is simply a guarantee that there was some work done it'll be in order to be offered on the floor will a gentleman co sponsor that with me i'll be happy to make it the fry well i won't co sponsored if i don't understand it as an aside if i do i probably will is great you know kind of an area for litigation and as a consequence as a litigator i'd ask that the amendment not be withdrawn so that i can support it looking like a trial or reclaiming my time i don't think that's the purpose that mr mchenry intended the amendment for every attorney in town to have a fatter while but with that i would yield to the gentleman from north carolina appreciate my colleague yielding just just to further explain i can't speak to the consequences of an underlying contract of not signing that underlying contract  because that is a contract that is that is occurring between two private parties and there are already ramifications for that when you sign your loan commitments and provide your fee for that loan commitment in the beginning of the process what this does is take back within the contract add an executive summary to the top of it and it would be binding based on the underlying contract so it is then becomes a part of the  sign it we understand that i do think it's unclear what would happen if you didn't sign the second document and i as i said i can guarantee the gentleman it will be that it would be an order you know i'm sure yes i'm sure the chairman was general th support this and i'm trying to find a way my concern is similar to the chairs we on the same row but we're going in different directions my concern is that with reference to persons who do sign it and don't understand it it's been my experience that persons that are closing will sign almost anything and my suspicion is with this bold language it looks like it's ten twelve point language you sign this there are consequences associated with signing it i would also add this in my congressional district we have the ballot in three different languages english spanish and vietnamese many persons don't read english and will sign whatever is placed before them to buy a home where the german you know yes i'll you i mean i would except you know a friendly amendment just reich the signature of that is that is a real concern my my chief concern here is that when you go to a closing just as respite was intended you have clarity of information and if if there is consensus that the signature and do not sign this if you don't understand it is going too far i'm willing to accept that i  page now my suspicion is you can have a page that's ten feet long and you probably can get it all on there but i do question whether we can get all of this on a page the size of the pages that you have your amendment had a wife and a husband and the wife after she read the disclosure said i'm not signing this at that point the closing i was the attorney had to say we can't close this loan the consequence of not signing this document would be the loan would not be allowed to to be given if you if you wish for that consequence to be the consequence that but that's that's clearly the consequence of the consequence of not signing a disclosure form at the closing is you can't close the loan the attorney won't be able to close the loan and that was on a friday afternoon i don't know what the husband did for the wife over the weekend but the next week they came back and closed and she signed  i can tell you the consequences of not signing is that there is no loan might be an underlying contract but right now if you put this provision in the law and person doesn't sign it and i think you need to look at those because if somebody decides that when a variable rate loan those would not be a political age is the fully indexed rate of interest under the mortgage express is nine percentage rate high is the maximum possible rate of interest under the mortgage expressed as the gentleman from north carolina that advancing this amendment has agreed that perhaps he can change his mind about some aspects of it the signature e rep but i would like to ask him to not pursue this amendment and think about it then work with work with us on trying to  consensus around certain aspects of this legislation one of the things we have been keyed on is not increasing the cost and making sure that f h a is solvent and i have even gone so far as to increase the up front payment premium payment for f h a in spite of the fact the chairman did not did not really want to do that so i'm not about to support adding any three four or five pages to anything at this point and i would think that if you had consulted f h a they may tell you that this increases you know the work their burden the cost all of that now it seems strange that i would be making this argument you're the conservative i'm the progressive or liberal and normally you would be concerned about cost but you know having worked on this bill and understanding what f h a is trying to do and what we wanted to do i'm taking the conservative position and i'm saying no more bureaucracy nor more adding up pages no more increasing  well if the judge gets five minutes five minutes and i'm actually making a procedural motion right now what is it you say you offered to work with me through the rules committee process if it is that offered extended most of my office have at least a ten minute life i'm just ensuring that if the general i'd taken steps down was not insuring anything i'm not in the habit of having my word need to be insured i said that to the down and i mean it all right let's a member to be considered as read without objection so watered and the amendment is now before us the underlying bill says that the revenue that is generated additionally by this bill and i want to stress that this bill leaves the existing f h a share prices in the footing that they were beforehand this amendment requires that the additional funding be divided in the following way under the underlying bill as i said the money goes to the affordable housing fund some question was raised about the solvency of the two zero three b single family fund it is not close to when solvent but this amendment says that first claim on additional revenue generated by this bill will go to that fund if necessary to keep it solvent secondly it would more than double the amount for housing counseling now there's been a lot of question about housing counseling they've been arguments about whether it should be mandated to the secretary or whatever i do not think there has been any question about increased housing counseling as a good thing both pre and post we are talking about expanding this to people who may not have as much if is to get your experience financially we're talking about zero down payments for people with all that that involves what we do with this amendment is to take the existing forty two million dollar housing counseling funding that's available to hud and your basis and increase it to one hundred million if we are successful in increasing the f h a s work then we will need that money it of course is the case and if we are not successful if the f h a is workable does not go up under this then the money does not get spent but as i said i did infer that there was agreement on the value of an expanded counseling even though we would differ about whether it was mandated not mandated whatever so what this does the existing bill has the housing fund now i know there will be amendments that gentlewoman from illinois that don't texas will both offer amendments that will move the fun what this does actually is reduce the amount in the fund in the current bill so that if it remains some of it will go first clinton will go to make sure the solvency of the of the single family program i think that is unlikely to be reached secondly it will put fifty eight million dollars of whatever we generate here into housing counseling zend the remainder would go into the fund so i understand the controversy over the fund but i want to stress the value of the purpose of this amendment is not to create the funded jodi there it is in fact to diminish the find by putting first claim on the revenues created by this bill to the solvency of the program and to the and to counseling is there any further discussion on the amendment generally texas thanks chairman and i think certainly this this is a proven over what's in the bill i have a couple of points i think one of the things that the chairman and i do agree on is we have been taking money out of this fund in previously we've been taking money of this fund it's been going into the general fund we are asking this new entity to ramp up and to become more relevant to develop some new products new programs certainly the educational component of this is i think important you know one of things i hope we would see down the future is that we would in our schools not wait until people get to be adults and i've already messed up their credit but even at the schools that we would begin to have some some educational opportunities that would teach people to how to be more responsible with their credit here's what i would hope we could move to is let's let's let this new entity get up and going let's let's stop any additional trains for years at of a least let's get these two programs th problem that i have with moving money out of f h a is that one of the primary ways that people have been able to we've been able to write the level of housing in america today to the highest level in the history of our country is we've had credit to be able to facilitate that if this is an entity f h a i think that has great promise of leveraging to if we leave these funds in this entity being able to develop programs that allow them to expand credit opportunities for for folks in housing and i think we do so much more good leaving money in f h a and letting them in and charging them with coming up with better  products products that reach more people rather than begin to take this out and spread this around in a housing fund where it's going to go for soft cost of organizations that are going to be asking for analysis is no no housing it's built we have the capacity in this country to build the most affordable housing in the world if we give the housing market a little credit then we should be able to  band homeownership you know even to to higher levels and so what i would hope is that these are not necessarily bad ideas i think in many cases there are premature ideas and i would to this committee and say here are ways that we think we can expand homeownership if you will leave those funds in our into t v this is our commitment this is our plan to make housing more affordable in america t dealing with making sure that the fund is totally solvent before printing is taken out so the real impact of this is to increase counseling money this is a vote on whether or not we're going to increase money for counseling and i would point out the gentleman says don't take money f h a this sa all of that money if there are no one members adopt it under the underlying bill all the money goes into the fund under this amendment some are going to counseling that's the point i was making well i think what i would be asking with the chairman consider let's put some additional money into reclaiming my time what i what i'm i guess i'm saying is that the education component is certainly one piece of it but what i would hope is that possibly we could move down the road where we were you it's not the it's not the you know it's not down the road the education piece of it that bothers me it's where we're going from there so what i would hope is that possibly we can work out a way to keep the education component of your commitment but of the gentleman from let me i don't take back the time that's the effect of this because of the fund is already there i mean i'm i'm baffled by what the gentleman is saying the fund money is in the underlying bill what this does is reduce the amount that in the fund to provide counseling at the german doesn't want to and by the way of other members had wanted to provide some counseling they were free to offer amendments that's the sole remember to put money in accounts well and i think it's all effective that him and i think the question is whether there's enough money and counseling right now i mean whether we need that that's a different story that's the general is opposed to more money for counseling i understand that i believe that since we're trying to expand the program we should expand once this amendment is offered if a substitute is adopted then no further amendments are allowed amendments therefore since we wouldn't know without having the roll call the gentleman i believe was going to offer that as the last amendment because no amendments could be offered after as long as your member nature is up to spending brown way to florida page forty two strike lines eight through eighteen answered the following new section section twenty one use of f h a savings for title to single single family mortgage insurance programs annual study before they commence one of each physical year the secretary of housing and urban development shall conduct a study of the single family housing mortgage insurance programs under title two of the national housing act to determine t required to conduct a study to determine if seniors and families premiums could be reduced if the study determines that seniors and families previous could be reduced and should reduce them as we discussed section twenty three of the underlying bill creates a fund  funding placeholder that siphons off f h a funds to support a brand new government trust fund taking funds out of age and using them for a purpose unrelated to its core mission with threaten the sovereignty of the f h a fund and its ability to pay out on insurance h a modernization bill was an act it would generate a two hundred forty seven million dollars surplus in two thousand and seven and a two point three billion dollars surplus over the two thousand and seven twenty eleven period the lion's share of f h a surplus would come from reverse mortgage premiums which are paid by seniors are we charging seniors too much maybe should we impose an unnecessary tax and two years by continuing to overcharge them you know we have  a funds that are in excess at the end of the year due to reverse mortgage payments and these funds go back into the general treasury funds and they should not be siphoned off for some new new purpose we need to keep f h a funds in the family perhaps increasingly popular congress and hud created this financial products for seniors who are house rich and cash poor so they have a chance to be more financially secure in their retirement years in one thousand nine hundred there were one hundred fifty seven f h a reverse mortgages loans in two thousand and six there were over seventy six thousand reverse mortgage loans the reverse mortgage products for seniors should not become money makers for the federal government to use that will so i think let's not siphon up the funds let's give the subcommittees is the subcommittee on housing and community opportunity which certainly means our implies that we're here to take care of the housing needs of the people of this country that we're here to make sure that people can realize the american dream of owning a home we here to make sure that we work at dealing with the homeless problem in america that we're here to make sure that the financial services community treat our citizens properly in the organizing and the making of loans and mortgages that we work both as oversight oversight committee and as a public policy makers to ensure that we take care of the housing needs of this country and so we have a house housing crisis in america we have a housing crisis where people who work every day who go to work every day some of them may be earning minimum wage it is people who work every day cannot afford a house we have households where there are two members of that household work and the parents maybe a mother and a father husband and wipe working every day to try and pay rent to try and own a home and we sit here as public policy makers with the power to do something about not only helping people to realize the american dream but just to be able to afford a decent place to live and to have a decent quality of and when we have the opportunity to expand the housing need to expand housing to meet the needs of our citizens we ought to do that we want to make sure bad we are trying to increase the quality of life by making sure that the housing units are available and that they are affordable and that and that there are people are taken care of so here we are with a housing trust fund housing trust fund that will add to that possibility a housing trust fund that instead of all of the monies that are realized by f h a just going into a general fund we don't know where that money is being spent and how it's been spent to just take a small portion of it and directed toward meeting this housing crisis and the housing needs of the average american that's working every day that perhaps can't afford a house a matter of fact for f h a to be able to provide the insurance for these mortgages they got to have units they got to have places for people to obtain to buy we've got to have low income housing that is been built been created and so i went to ask my colleagues to rise to the highest level of concern about housing as being a part of this committee and support this housing fun to make sure that we are creating some additional opportunities for people who could otherwise not be able to afford a home our housing unit back about to get a loan for a move to strike the american homeownership act that miss bigger introduced earlier this year the bill is adenike zero two h r fifty one twenty one which passed last year by a resoundingly vote of four hundred fifteen to seven and that included the vote of every voting democrat so i think some may be confused that instead of considering the same bill as last year we're considering a bill that's much different the biggest concern that i have over the underlying bill is the creation of yet another affordable housing fund but this time on the back of seniors i am just not sure when it became good public policy to knowingly overcharge citizens for a product this time reverse mortgages only to fund a different program for which none of them are eligible to seniors in my district who take out reverse mortgages do so for specific problems sometimes it may be an unexpected health problem or they may use the reverse mortgage funding to make their homes more comfortable for a loved one the seniors live on fixed incomes and have no other alternative other than to tap into the equity of the home that they have built over their lives for congress to profit on those circumstances i think is not good public policy if hud can charge the seniors less the bottom line is that we should insist on a period congress should not encourage overcharges to create yet another slush fund i support my colleague's efforts to give these tax dollars back to those who paid them to seniors living in our district in a encourage all members to support this amendment i think the chairman and i yield back the balance of my time i recognize myself  mentioned i guess the difference between some of us on our side and some on the other side comes when my good friend from florida talks about an honest effort with which he may disagree to build housing for people in need as a slush fund that seems to wholly inappropriate ways to characterize the effort there also a couple of factual errors in which he said nothing in this instance how to raise the fees indeed what's interesting interesting to me is this and we earlier adopted him i mean the gentleman who was one of the main move responded to reduce what others can charge with regard to act and but neither the gentlewoman from florida nor anybody else has offered an amendment to reduce what hud charges and it's interesting to me that the only time we hear this concern about what hard to charges is when we talk about trying to provide more affordable housing for people in other words where were those people concerned that hud was overcharging when the money was just being sent back to the treasury the impetus appears to be to me not concerned that the elderly being drug you much because people felt the elderly were being drugged too much have had infinite opportunities to offer a language weren't talking about helping lower income people and then again when florida said well this will help the elderly that's wrong in fact if you look at the housing that is built affordable in subsidized housing elderly people occupy more of it then their share of the population that's perfectly reasonable this is not some program that's going to exclude older people so we have had the f h a generating share prices of close to two billion dollars a year for the last five years one point eight billion a year for the last five years i do not recall any member on the other side saying you know what they're overcharging people overcharging the homeowner they're overcharging the elderly let's mandate a reduction many of us have objected when they tried to raise the fees but the only time we hear this objection in committee in legislation is when we're talking about using some good for helping affordable housing there's a terrible affordable housing crisis in this country and i understand the republican position has been let's just do single  vouchers annual vouchers which means you add to the demand for housing in ways that don't help the supply many of us believe that adding to the supply of housing is very important and we are taking not existing but money that will be generated by new things we do some of which will be generated by f h a loans mortgage guarantees in the upper income areas some of which will come from the heck i'm free and again i am surprised to hear people say husband over judging people in the second when no one who said that was moving to make cut reduce it and nothing in here mandates had to go up we do not hear in this language say to hud go up down or sideways we do say whatever might be generated comes in what's being generated here is not from an increase in fees but for an increase in the volume of business we will move an artificial cap in this bill on these programs then we're saying now if i said we want to create more revenue by creating more activity giving more elderly the chance charging them no more than they've been charged before but all of a sudden because we want to help affordable housing that's a slush fund so all those people who need help with housing they are the recipients of slush well that's a fundamental disagreement between us and show i would hope that we go forward the previous amendment says we will make sure the two zero three b program is fine we will do counseling because we think that's a good idea and when this money goes dover we will put it into the construction of affordable housing for elderly and for families and as i said i think this is a defining difference  between us is no different about what the fee should be nothing in here puts the fees at any level there's no difference about anything except whether or not there should be money put into affordable housing yes it's the same issue we had with  freddie mac we've gone through twelve years in which there were virtually no programs for constructing family housing for people who needed it for teachers and public works people who can't afford to live in their own communities for other oregon people for people in the working category and below and many of us believe as i said that an annual voucher program does not do the job alone that you need to supplement it with a with a program of affordable housing this is the way to do it that does not add to the budgetary california thank you i do think there's a conflict of ijaz here there's a philosophical difference between us but this is similar in concept to the to the housing front of the g s t legislation and in my view this concept is out of central pl one and i just wanted to raise some concerns that i have here first if these funds must be derived and i don't think they should then they should be geared toward ensuring the f h a remain solvent rather than supporting an agenda which moves this towards increasing government or more socialist inclined agenda in my view this fund could not be proposed in my view at a wors time because as we see the current spike in foreclosures in the subprime mortgage market many of which are backed by the f h a is a problem so as i say we've got a conflict in terms of how we look at view this as a situation where more limited government and freer markets those kinds of policies will guarantee the types of results in which homeownership rates improve they improve when real interest rates are low and when consumer incomes are high and a drive that i think you want to drive the private sector not the government sector this fund will in my view waste resources and provide false hope for those wanting to increase homeownership and additionally this fund will create again a terrible precedent for other industries as i said during the g s t housing fund abate i hope that other financial institutions are watching because they will be the next target proponents of this concept will not stop with g s e's or the federal housing administration they will again look for these resources they will look to take money from wherever they can from whatever source they can obtain i'm going to raise another point here because for those of us in southern california we've noticed a problem with government housing and that is there is a magnet effect and magnet effect that draws a billion people around the world in the last polling done by gallup there are over a billion people that want to come to the united states i don't blame them for wanting to come to united states but from an infrastructure standpoint there is no practical way that we can handle all the people that want to come given our inability to handle border security it just seems a consequences of this are going to be the more government housing we provide the more we're going to have that magnet effect that economists warn us about the more we're going to drive drive the demand i have friends from south asia who t me be careful of these policies because what you're doing is in creating an incentive for people to come to the united states more people than you are going to be able to handle in the united states and i just think all of this has to be thought through and at the end of the day i think the marketplace the free market is the best arbitrator of this we do have a philosophical divergence of opinion on this i understand the other point of view but i feel compelled to speak out on behalf of philosophy that i hold and i y t i thank them and i thank you for putting it in the appropriate terms and i would say two things first as to the magnet effect i would note that we did adopt the amendment to the gentleman from west virginia which tries to strengthen the legal requirements that is only go to people have a legal right to be here secondly i would have to say to democrats again on the philosophical level the implication of what he's saying is that one good way to defeat legal immigration is to raise housing costs in america that may be a step too far i would think no what i'm saying though is  if you have governmental housing that is focused on people primarily who have low skills low job skills and if your immigration policy is to bring people in the president's policies clearly that to bring people who do not have the job skills and make maybe one third of their needs in this society in terms of what they are making and the consequence is a shifting of resources in order to try to cover for in public costs the needs of those people then the likely consequence of the convergence of those two policies is going to be to been assured that this debate was going to get to this point but less at least get it to this point with some factual information the last time i checked the federal government has constructed in any new public housing in this country when mr chairman i certainly not in the last twelve years and maybe before probably fifteen years yeah and we've been destroying public housing time after time after time and mov e situation where our whole housing policy is to provide a voucher for somebody to go into the private market  and vouchers work in some situations they work in part of my congressional district where the demand for housing is low and the private market loves to have the vouchers so that they can put somebody into those privately owned units that they can't otherwise  occupied or rent it they don't work in other parts of my congressional district where demand for housing is high and the private sector has no interest in taking a voucher when they can get a non voucher occupant in those parts of my district unless the private  market is being incentive to build subsidized housing for lower income people to accept those vouchers or  by the private sector is because the federal government has gotten out of the business of constructing public housing trust piece of legislation out of this committee under republican led in a republican congress we passed it out of this committee and it was your  leadership that filed the notion of a club of a housing trust so appealing that they refused to allow it to be to come to a vote on the on the floor of the house because they knew that it would pass on the floor of the house so this notion that we haven't had a hearing about it we've been hearing about this and the like of  and i had a debate about it for two hours on the floor of the house about whether it would be continued to be an objective of the united states of america to provide in addition if i have the figures are right the housing function has almost doubled in the last ten years which also has me begging the question what point do you have enough government subsidy i don't know i haven't heard from the new head of c b s but previously i've seen an opinion from c b s that the i a f balance doesn't constitute budgetary resources for us to spend at our will the funds balance is not additional resources to the federal government may be the sponsor of the legislation has a more current ruling on that particular issue but fundamentally it a to me that if premiums are too high in the sun i frankly haven't looked at it close enough to know if they are are they not but if they are have two observations number one maybe they ought to go back to the people who are paying the premiums in the first place my second observation is that with few exceptions the federal government has never done a particularly good job in ministering and insurance on and then my f frankly is one of the few exceptions although it did come close to insolvency back in the eighties i just know that fairly recently up until hurricane katrina we were told there would never be a taxpayer subsidy for the federal flood insurance program and lo  behold we now have a massive infusion of taxpayer funds so if we're not going to rebate what may be appearing to be excess premiums today maybe they actually need to stay in the sun to ensure that the arguments most compelling that if somebody is running around with a voucher that represents money that there is not some entrepreneur out in america willing to build housing and receive funds it's simply works perfectly well in some parts of my congressional district in charlotte though you weren't there for the i mean my time reclaiming my time i understand the gentleman's position i'm not sure who determines whether in the right place or whether they're in the wrong vouchers that depend on the annual appropriation process do not lead to more housing because no developer can go to a bank and get a loan for the duration needed for housing based on an annual vouchers banks w do that the regulars who let them so as long as vouchers are annual it is the overwhelming consensus i urge them or top people the business that you do not get housing built based on an annual appropriation we did have project based we no longer have those reclaiming what little time i have left here still do not long for the days of seeing uncle sam once again get into the landlord business which i don't think they've done a particularly good job of but along in the short of it is there is a very basic philosophical differences i still believe the vouchers would work i don't understand the need for this additional program that we know very little about and without yield back the balance of my time mr chairman you've made no secret over the fact that you plan to establish a national housing trust fund and fund it from a variety of sources  n the g s c reform bill we signing fannie mae and freddie mac upwards of three hundred billion dollars worth of charges over the next five years and now in this bill in wanting to create a national have housing trust fund i think it it's a sincere belief on your part and in fact i don't take issue with with your view that developing affordable housing solutions  lower and middle income americans is important i have disagreed about the main which you've chosen to achieve this objective moreover i strongly believe that before we create any new taxpayer funded programs we must stop to consider the consequences of our actions on future generations of americans and primary and not concern is that our baby boomers will start retiring next year we talked about our elderly citizens earlier in the afternoon and are concerned for them that they're depending on social security and as we all know in sixteen or seventeen years by all projections of benefits won't be there actually about two thousand and seventeen that's ten years the we have to start scaling back on the benefits the amendment i'm offering today is simple it would postpone the new spending arthur legislation to finance an affordable housing fund until such time as congress stops raiding the social security surplus to pay for unrelated government initiatives this year and i know during the campaign the democrats pointed out that republicans had been raiding the social security trust fund  you promised your party promised to they would refrain from doing so but in this year's budget which the majority proposed we will raid the social security social  security surplus an estimated one hundred ninety billion and i use the word raid because that was the terminology which was used in the last election will take one hundred  ninety billion dollars and will spend it on other government programs in two thousand and eight that amount increases to two thousand and three and as my colleagues are also well aware as i said studies indicate starting in two thousand and seven social security tax revenues fall short of benefits day of reckoning in light of these numbers it is simply a sponsible for this committee or this congress to authorize funding for new and untested government programs no matter how well intended or well constructed to authorize funding for these programs and to we start to address the long term solvency of the social security program when we campaign on principles of physical responsibility as many of us on both sides of the aisle did voters take this to mean that current spending will decrease and future spending will be curtailed mom and that simply takes us at our word and provides that the surplus for the f h a program should only be available to finance new government programs our housing programs once we stop raiding the social security trust fund for most americans social security is a sacred trust they pay into the system assuming that the money will be used for social security for their retirement or for their dependents or for those who become disabled and that social security will be there for them when they retire are become just a disable or for orphans of those who paid into social security americans believe by vast majority just as do many republicans and quite a few democrats that the money paid into the social security system should be used for one thing and one thing only paying social security benefits the social security should not be a piggy bank it can be raided to pay for other programs for those members who campaigned on promises to insure the sovereignty of social security and promote physical responsibility of vote for  way to fulfill the promises of vote against my amendment sends a very different saying you are content with the business as usual status quo that jeopardizes the retirement security of millions of americans and that you're willing to take money which as the chairman said about two billion dollars a surplus that now goes into the treasury and thus reduces the right on the social security trust fun that you're willing to take that money even though it means that dollar for dollar the amount of money americans have paid into their social security trust fund is no longer there mr chairman arch  about i recognize myself let me begin by saying that the gentleman's last statement astonishes me because it is as flatly wrong as anything i've ever heard he said nearly two billion dollars goes in and this bill jeopardizes that we have made it very clear that quite the contrary is the case in fact as we have pointed out it was our asking c b o told us that over the last five years the f h a has contributed eight point nine billion to the federal treasury from existing programs as we have made very clear nothing in this bill affects one penny of that flow of funds the money we're talking about for affordable housing comes from some new activity new activity it is by the way in the amount we would hope of fifty some odd million fact counseling and about two hundred twenty five to two hundred fifty million for housing so not even close to two point eight point nine billion or two billion a year but the money that has been flowing continues to flow this bill creates some new revenue sources and uses some of those new revenue sources for this program secondly with regard to raiding the social security trust fund i would say i think the gentleman's numbers he says in by twenty seventeen by twenty seventeen the program will be no longer taking in additional revenues overwater paid but if it is accredited whatever you know it's already been paid in the interest it's from social security to subsidize the budget and i think that too long and i know where we can get more than half of it your war in iraq i want to tell you that when i have people here who are eagerly supporting this one hundred billion dollars a year plus a drain on the federal treasury complain to me because we want to create a new revenue source of about three hundred million dollars and use it for affordable housing i have never seen such disproportion in my life i agree that we could be cutting back on excessive spending i do think that if we ended the war in iraq and our participation in that would be one of the great advantages though there are other areas where i am ready to move kutch but what we do here simply sa that we create new revenue we were some good for for housing now we talk about future generations i think you also should be making a distinction when you talk about spending between expenditures that will be consumed immediately and those that represent investment housing stock as an investment and we have a serious problem in this country where there is not enough affordable housing in much of the country and we're not talking about the desperately poor we're not talking about people in public housing only we're talking about people who worked in kansas city when the gentleman in kansas city was a mayor and couldn't afford to live in the city that they worked and that's true in every city if you talk to every mayor around workforce housing we're talking about people in many parts of this country who work very hard to family incomes and make thirty and forty thousand and we don't have enough we are not going to build all the government and by the way the gentleman texas said government land what's the government admin the land what a long time we're talking about federal funding that help bring down the cost of privately building privately man most cases and that's been very successful you don't think it's successful try to get into some of them look at the waiting lists that you have in fact we have this problem beginning in the sixty's we spent money to give developers the ability to build housing for low income people people said at the time but we don't want to live near that now the restrictions on the housing rick spiraling in many parts of the country you know what the problem is nobody else wants to live there it turns out that that housing is so desirable that we have a problem of preserving it affordably for older people so i understand the distinction yes many of us do believe that given the housing crisis that we should be using some funding to help add to the supply of affordable housing because that also helps everybody because if you reduce the competition for the housing when you have only about your program you're driving up the rent if you have a voucher program that is accompanied by some construction you i should like me to have an impact that's what we're talking about but in the final equity mortgages don't add to the budget deficit they only pop up whenever we want to help lower income people they're not consistently applied principles i don't remember hearing about this particular principle the gentleman in alabama has offered here i don't see that amendment when we deal with the agriculture department when we deal with the pentagon when we deal with the president's proposal to go to mars i don't see those proposals and whether the gentleman you will yield i would and i would predict that you'll see a lot of those when i thank you general i think the old guard i'm telling back my time i take back that the gentleman projects well voted for a lot of people but we've just had twelve years in which you're in the majority did they just occur to you had these things not did somebody just tell you about them west january where were they when we were voting to send money and spend money to go to mars or for a lot of these other factors so i'll look forward to those i don't know i must tell the general get to done going to california second i would tell my friends  emma i am very skeptical and with regard to that i will trust but verify i'll be waiting for those amendments on the marsh aat and on agricultural subsidies and on the a lot of other things and i will if i get additional minute with unanimous consent  shot this year away to see how many people join me i think we spent too much money subsidizing some of the agricultural activities last year i'll try it again and i see that the war in iraq was a terrible drain on this country in a number ways including the money but i  consistent but some of us have been consistent on this as well i've been critical i know the gentleman from texas next to me has been critical i know the gentleman from new jersey just in this row of republican leadership for basically raiding the trust funds as we know that our children and their children's children are going to face the absolute eventual unavoidable collapse of the entitlement programs including social security so we've been consistent in the general i've been consistent against the  shot program the gentleman doesn't believe that national space program or space predominate as a national priority i come from kennedy space center we do believe that it is essential to america's future including our defense that the space predominan be maintained otherwise we're in big trouble from a security perspective not to mention a technological and communications perspective having said that i was very excited at least with respect to the spending when the democratic majority announced that it was going to adhere strictly to the pay go rules i thought that was very important but we find all these different methodologies including ignoring their own rules to avoid their pay go rules and i do believe that we need to put the entitlement programs on budget i believe that when my party was in majority i believe that mel now more than than ever so maybe i'm even more enthusiastic under a democratic majority but i was always enthusiastic i will tell you that this is essentially a raid on the surplus of the social security fund as the chairman said the we know that the surplus expires somewhere between two thousand and fourteen and two thousand and seventeen the only way to protect the programs long term future is to preserve what we are able to accumulate in the short run now along with other major very difficult reforms to do i think the place and the time to start is now i think this is consistent with the spirit and the intent and the letter the democratic paygo rules on new spending programs which i very much agree to i'm going to help the democratic majority and here to these rules were in some ways the republican majority didn't philosophy behind it but in both cases we are creating revenue that we then want to expend in part for these purposes that's pay go pay go doesn't mean that you never have a program this program does not touch this bill  fines that go to the treasury f a q it expands the activity f a k and creates new revenue and spend some of that simply with the g s t bill there was money that came from the d s he's not from the budget so in both cases they meet paygo i recognize now agitated he'll want to scratch it off i've been listen to the three speakers from the minority side and i've just got to point to where i got a scratch and they each i hear one of them say that big government spending in housing for instance you know who bids on that big government spending is general contractors who are probably only the black corporation or by individuals the federal government or state government builds no housing it is a private contractor who builds that the problems that he earns he takes and put it in the bank so that big government spending that big on the program he loves but the thing you don't like is that when he makes all that profit ultimately there is a requirement that you also contribute some of that back and this you call taxes that becomes big government in the ass for profit that you make for you that least pay a little bit that back in revenues to the federal government which and again and again continues to roll over so i listen to all this about government spending and i am a general contractor i've been a benefactor quite frankly of some that big government spending but a lot of folks now live in housing in the area that i represent and quite frankly a current senator elect in tennessee was a big government housing builder he has been on the other side of the of the absolutely all of the folks that we talk about in this room and talk about been anti government it's only when you get to spend that money from the area close to where the space institutes are lax findings federal spending on dollars that sent just to the moon well that's ok with me i guess are to mars but that's government dollars private contractors actually bid on all of that and they are in a profit but then they become anti government when they're asked to return it back on the  not heard another gentleman talking about all the spending of democrats he mentioned our budget that we just passed the budget that we just passed bounces by the year two thousand and twelve when i went back and looked at some of the facts i notice from nine the ninety three i believe that was reagan and bush years we saw government rise worries twenty two percent of gross domestic product from one thousand nine hundred three to two thousand and one these are facts check them i saw government received downsizing of government welfare reform and downside of government to eighteen point five percent of gross domestic product i remember what i'm saying through the regular bush years a good twenty three twenty three percent downsizing of the clinton years for eight years towards eighteen point you mr chairman i don't have any ticks and hound dog metaphors but i would point out that anytime we're handing out bacon to some group or taking it out of somebody else's smoke house when there is somebody getting something for nothing there is somebody who is getting nothing for something i understand that the gentleman from massachusetts our chairman says that this particular new housing program will comport with paygo requirements and take him at his word but i will say having also served on the budget committee that according to analysis by the congressional budget office the office of management and budget the general accountability office the federal reserve the department of treasury and just about anybody who counts money in the nation's capital that just with the government we have today without creating any new programs whatsoever we're on automatic pilot to double taxes on the next generation to have the tax burden go from roughly twenty percent of our economy to forty percent now i don't know what that does for affordable housing in your congressional district i can tell you it doesn't do much for affordable housing in the fifth congressional district of texas in fact as all my friends on this side of the  their budget with the single largest tax increase in history that for people in my congressional district will amount to roughly an additional twenty eight hundred dollars a year i had all kinds of correspondence from people telling me this was a threat to their housing how are they going to make their mortgage payments when they have to pay uncle sam an extra twenty eight hundred dollars a month and that's just with this almost four hundred billion dollar tax increase over five that doesn't even mention what's going to happen to the next generation when we go from twenty percent to forty percent of g d p on taxation and you just got to ask yourself some time when does the madness stop i mean when do people start actually looking at the next generation so yeah i'll concede the point it's easy to balance the budget by raising taxes if you really think the future you want for your constituents your children and your grandchildren is to double the taxation burden on them and see what they have to their ability to buy their first home their ability to send their kids to college their ability to put together cash but all in start there for small business then we just have a very very different vision of what the purpose of the federal government is and what the future of america should be so i believe that we ought to support the gentleman some in that from from alabama and it's a very clear choice you can make right now i  myself and several other people on this side of the aisle have supported legislation in the past that would preserve the social security trust fund sometimes contrary to leaders in my party and i would hope that now you have an opportunity if you really believe that to say stop the madness let's let's ensure that we don't continue to waste the surplus i'd miss it's been done by both parties and i enjoyed the history lessons but we're here now the question comes california move to strike the last word recognize just like to suggest to my colleagues on the other side i'll maybe look at this in a different way you often point out that we spent too much money when we were in charge we did you often point out that budgets prior to this raided the social security surplus they did look at it this way we're trying to help you not make the same mistakes that we made now unfortunately your budget is not encouraging because it spends a lot more money it raises the security surplus every year for the next five years and it has the largest tax increase in american history so when you have an opportunity here because this is how one this is social security trust fund money that we're just trying to give you the opportunity here to not make the same mistakes that we made and to start moving forward to not spending too much money and not raiding the social security comment about giving us the opportunity to be helpful seem to me not to pass a straight face test and i will concede that i am not the world's expert on great things but that when it didn't seem to be passed that day reclaiming my time if i may mr chairman straight faced otherwise this particular face of the would have a great big smile on it if we could get to a budget that that did not raid the so security surplus and did not increase spending in the  any program right now as long as we're taking money out of the social security system we're taking money away from seniors we're taking money away from the future of our country young people that are going to be saddled with the trillions of dollars worth of unfunded liabilities the question our race is why you see it around here that we're always looking for ways to spend money this program is going to generate some revenue and so we immediately jumped out and said let's figure out a way to spend it why don't we do something novel and declare a dividend back to the american people do clara david in back to the people that are most originating these mortgages  if we're collecting making these kinds of premiums creating these kinds of surpluses and the fact it is a safe and sound actuarily why don't we give it back to the people why do we have to look for some way to spin money every time we generate some money around here and i think fundamentally that's how we got into this deficit situation that we're in now is that people spend more time around here trying to spend money when they try to figure out a way  not to spend money and so i support the gentleman's amendment because what it does it starts bring a little wake up call here that this congress in congress has before us under both the leadership of both sides of this i'll have been spent years and years and years of trying to figure out how to spend money and when they ought to been figuring out ways not to spend money your backbone so is there for the debate if not the question comes on the a member of it by the d illinois so i'm going to take the votes we told members we have some we're going to get a woman california and they don't california will get a chance to offer their members then we will take the votes that have piled up we'll come back and be able to finish in a reasonable time tomorrow morning so with that  market and there have been some questions raised about whether or not they could do this effectively whether or not it be a cost effective program whether or not they would lose money on the program and while of the existing a law under current law the upfront f h a premium is capped at two point two five percent and point five five percent annually for all bars we decided to take the advice and the urging of the representatives of hud an f h a and we will allow f h a to charge a maximum upfront premium of up to three percent for high risk and i think this is consistent with fifty two as it was introduced would have retained the upfront premium for high risk bars that those borrows would would represent those with five sixty piko score or low or at two point two five percent and point five five percent annually again this amendment would increase the upfront premium cap to three percent for the high risk bars that is the fica score by sixty or lower the amendment is designed to an  to service you know a bar pool that perhaps would not be serviced if we did not do this and to charge that up front higher premium and so i would ask that  my colleagues would support this amendment it is it has been asked for by f h a and hud and our effort to try and work cooperatively with them to get the best bill possible has everybody the people who made the payments would get rebated from that the people who didn't make the payment wouldn't get it so it doesn't change the rebate if you make your payments but it does raise hard go up to the higher figure out how it's at the upper eighty eight discretion if they think they need it for the funding but  waters has done nothing about this is just for first told first time homebuyers has not changed at all no it does not include low income no refinancing no the first time  still remain at the two point two five and point five five percent annually as existing law i believe it is i would say that their mortgage on her subject will still be very relevant i mean even from yes you have said the member says read like the chairman this amendments very simple says no money should go to the housing fund in any fiscal year unless the secretary of hud has by rulemaking made a determination that mortgage interest premiums charged for mortgage insurance are established at the minimum amount sufficient to insure the safety and soundness of the mortgage insurance fund secretary show for others certifying that any negative credit subsidy resulting from the mortgage insurance program even after premiums are at their lowest possible adequately insure the effect of delivering availability of a program we should be careful to what we do with negative credit subsidies from the f h a program this is a mortgage insurance program first and foremost we must ensure solvency of the program in its long term safety and soundness no negative credit subsidies will fluctuate with the housing market we cannot be comfortable at six or plus as we have been experience in recent years because of the downturn we're currently experience a program will not generate those same funds on the down here and second of negative credit subsidies exist because premiums are too high then we need to fix a premium structure have already seen the tendency to increase premiums to provide funds for other programs congress never intended for these premiums to be used to generate excess income however we must keep in mind that for years a dollar general to have a child were merely deposited into the general fund it makes sense that ensure premiums are as low as possible and that the insurance fund a solvent that any excess funds that are generated from the program do the mechanics of an insurance fund stay with have a change to the extent that they are needed that is what this amendment does please keep in my that the money is we are talking about here is money that currently is going to the general fund due to the mechanics of the insurance fund this man is merely to keep it here premiums low and keep the mortgage insurance fund solved it i feel that i recognize myself to say i think this is very constructive we hope it won't be necessary but it does mean that what we are talking about here will never be the reason that any premiums have to be raised have to be raised it will ensure that first call completely on any additional revenue that we get a rate here will stay with that we've been talking about for the last six or seven hours we need to give it the same principles to work off of its competitors and that is when you're making a profit or you're creating excess revenues that you be able to take the take those revenues and plow him back into the entity the first thing this does is it says that one we want to make sure that the risk insurance fund is safe and sound we're we're going to ask in this legislation empowers a employer into him put in place a number of new programs some of which we don't know exactly what the experience ratio is going to be on those when you start talking about no down payment when you start talking about taking  folks with a lower credit ratings you are taking greater risk and so it makes sense to keep make sure that the safety and the soundness of this organization is in fact insured over a long term basis and not just through one or two economic cycles the site second piece of that is is being able to make sure that the technology and the resources that f h a will need to be a twenty first entry into t v are in place and what we hear time and time again from many of the agencies is they come and present their budget is that they do not have the funds to invest adequate to keep up with the technology and in fact what we was in a hearing earlier today where the secretaries was saying that their technology is behind the curve and that's one of the reasons that they had a security breach in their data and so really what we ought to do is see it earlier the ability primarily fueled by the availability of credit now in some cases that that credit was excessive and we're going we're learning some lessons from that but quite honestly we have moved to new levels of homeownership in america new levels of housing we've done that with a lot of private sector participation and i believe that it is in the best interests of as we move forward with this program of adopting the principles of the amendment that we just passed of  friend from california one making sure that the these funds are safe and sound but secondly letting the f h a and reinvest in technology reinvest in new programs and be very  robust in the products that they offer so that we can begin to move in and continue to move in a direction where we are improving the home homeownership rate in this country and i just think it makes sense if you're entity to compete out in the private sector that you've got to give them the private sector tools that their competition enjoys and that is the ability to control how you reinvest your disagree with the first the first amendment i don't think we have to debate any great i mean we've heard this it strikes you for the housing fund it represents the budget a bit different on the second shot i did study and report on technology i think is an excellent amendment and i very much agree with it it's something we should have done so the effect of what i've said is if we will take two separate votes we will vote first on the part of the member which in effect strikes the affordable housing fund and then we will take a second vote on the on the amendment calling for the study is there further discussion because we have debated the fund if not the vote comes on the part one of the amendment that's on page page one the beginning on page forty two going to and all those in favor of that p chairman it would be wonderful to have have it included the federal the f h a was created as you know in order to extend the american dream to more americans and protect the financial institutions making mortgages and stimulate the home building industry the mortgage industry is made available by f h a protect against homeowner mortgage default this allows lenders to obtain insurance for a value of ninety percent of the appraised value of the home or building for a small feat because the declining performance of the mortgages of the f h a ensures the f h itself estimated that it single family insurance program would require a taxpayer subsidy in fiscal year two thousand and eight in the absence of program changes and this legislation and the reforms that will institute will go a long way to ensuring the f h a adapts to the evolving market my it will further protect taxpayers by simply applying the principle of paygo to any new spending authorized by this legislation requiring that any new spending as a result of this legislation have a specific offset before the legislation could take effect if there's no if there's to be taxpayer subsidy as good stewards of the american taxpayers hard earned money we should provide a specific spending decrease to offset any new spending and i encourage the adoption amendment you know back to the house my time the chair recognizes myself for five minutes appreciate the gentleman moving this one expeditiously it is similar to the amendment offered by the ranking member in its effect obviously it's one of the areas where we disagree i do reiterate that in this amendment in this legislation authorizing additional activity and i would point out by the way not tax not taxation the original revenue the additional revenue that will accrue from this bill is voluntary revenue if it's different from taxation that is it is people deciding to take out certain to do certain things with the f h a and it is fees that the f h a gets from the mortgage insurance we expand the ability offer mortgage insurance and we take some of that for affordable housing i believe that is an appropriate way to deal with this and so i hope the members not adopted as in further discussion now miles yes and is it your contention that that extra revenue that is gained will cover the expenses always not just my contention it is built into the bill and bill is so written so that in fact it will be the additional  i could not tell the gentleman having just seen this remember for the first time whether it consisted of not but then it doesn't do it simply consisted it wouldn't do any it does add nothing to it i'm always glad to look but i would say don't manage when we've been working all day on a whole lot of other things to get in a moment without any chance to look at it i am telling her the yemenis obvious i'm disinclined to deal with it yes tell you again the languages you have seen many many times it's included in that in my understand that i've seen it many many times but there is context in the context of this bill and as i said i do know that the there was no there was no way the way this bill is written that it could add additional revenue because and among other things as we significant contributor to the budget deficit is there any further discussion if not to question is on your wish to be yes and thank you i have just an observation as i read this it could mean that we determine the net effect after the act has actually been course it i appreciate gemma's comment it may not be clear however it's the language that that your party adopted as your paygo language in the rules that were adopted in the hundred ten pound note i need to clear that language up but i doubt if there isn't clarity that we need to repeat what the effect of rejecting the first part except the second what may have left the second part without the funding it's not a huge amount of funding out as unanimous consent of the staff be directed to work to make sure that the funding for the study is in fact made objection without objection it is so water that means that you can all go out here without being besieged by people who have two new amendments and they just thought of that they've got a good offer tomorrow morning we will return in five fifteen votes no mr cleaver ms bain ms moore this more of a no mr davis of tennessee votes no mr kline mr mahoney mr mahoney vote no mr wilson mr wilson votes no mr perlmutter there kirk will the gentleman from florida mr cohen mr klein the gentleman from illinois ms bean gentleman from florida couple more at the conclusion so i was seeing that nine thirty because it will be sync you know i would recognize down from north carolina but i thank the chairman and i ask in that in a bipartisan cooperation with this up there with three more amendments after which we will have the remaining votes from today which there were four and maybe two or three that will result tomorrow the meeting is recessed until tomorrow