Date: 2006-07-25
Speaker: GARY G. MILLER (republican)
Chamber: H
State: California

Mr. Speaker. I want to thank Chairman NEY and MIKE OXLEY for their help in this area. That is an issue that BARNEY FRANK and I- have worked on for quite a few years. We started out with a GSE. government sponsored enterprise. which is Fannie and Freddief trying to reform that concept in highcost areas. We found out that many people in highcost areas. such as Mr. FRANKS district and my district in California and MAXINE WATPERS district. because of the rising costs of houses. people could not qualify for conforming loan limits. We had to raise the conforming rates in the highcost areas. and the same problem once we completed that was realized in FHA. BARNEY and I took this on a few years ago. trying to take a system that has been up and running for 70 years and conform that system to todays marketplace. It has basically become so antiquated that many people in highcost areas could not qualify for an FHA loan. In fact. I would talk to brokers and lenders in my district that have not been able to process an FHA loan in years because the system is so structured and the costs have gone up so high in housing marketplaces. that you have taken a situation where firsttime and lowincome buyers could not qualify. or if they had to go to a conventional loan because of the high loantovalue ratios. they couldnt get those loans. And because of the paymenttoincome ratios. they couldnt qualify for conventional. That is why FRA is an extremely viable option for these people. When I say "these people." I am talking about the people who work in our districts: teachers. nurses. firemen. policemen. They live in areas that they often travel in California an hour and a half to 2 hours just to get to work because they cannot afford to buy a home within the city within which they work. Their reasons might be lack of downpayment or other reasons that in the past have been figured to qualify for a conventional loan. That is why if we can bring FHA up to todays standards. we can provide loans for these individuals who need to buy housing where they work. who can make the payment. and they can qualify for an FRA loan if we raise it in highcost areas. A situation many of my conservative friends. and I am extremely conservative on- the Republican side. we had the argument over is this a government program that is taxing people and basically providing a subsidy for somebody else. and it is really not. The people who qualify for FHA and get the FHA loans pay for the insurance. As a matter of fact. it makes a profit for the Federal Government. Some people .say. well. we need to raise the amount of premiums and the percentage based on what they are borrowing. and some still believe that is appropriate. If it is proven that the system is not breaking even. which it is today. then lets look at it. but there is no reason to raise premiums on a loan that we are basically trying to expand for more people the opportunity to qualify for. Limiting the FHAs complicated downpayment calculation and traditional cash investment requirement is provided in this loan. It was a very cumbersome process. It was complicated. It did not need to be that way. and providing FHA the flexibility to set insurance premiums commensurate with the risk of the loan is in this bill. and that is most appropriate. They are basically saying that we are going to base the premium on how risky the loan is we are making to the individual. rather than coming up with some matrix that just says we are going to raise premiums overall for no proven reason. This says. lets look at the risk based on the individual. and lets base the premium on that. It is a reasonable approach. It takes FHA and brings it up to the level it should be today. It takes a system that worked 70 years ago. worked 20 years ago. but today it does not because of the inflationin housing. the costs have gone so high. that FHA loans are so low. you could basicallynot provide that opportunity to people who really needed it. I want to thank MAXINE WATERS who has been very helpful in this. We have had a lot of fun working together. There are some issues we dont agree on. This is one we are absolutely in lockstep on. In fact. it is amazing. between MAXINE and BARNEY FRANK and Chairman NEY and myself. the issues we have come together on in housing. trying to provide and meet the needs of our communities. and just by changing the rules offering expanded opportunity. we have come a long way to helping people get into a new home. both firsttime home buyers and police and firemen who might be in their second or third home. but they just have trouble with the conventional marketplace because it puts them into a jumbo loan when you get up into these areas. Savings to an individual for this type of a loan might be $170 a month. That is tremendous. It provides an opportunity that does not exist today. and it is a very good bill. and I ask for an "aye" vote.