Date: 2007-09-18
Speaker: GARY G. MILLER (republican)
Chamber: H
State: California

I rise to offer an amendment to H.R. 1852. the Expanding American Homeownership Act of 2007. My amendment would allow qualified down payment assistance providers to participate in the FHA program if certain conditions are satisfied to ensure that the down payment assistance program is legitimate and that the gift that is provided to the homeowner and the home buyer is truly a gift. One of the primary barriers for many Americans to achieving the dream of homeownership is the lack of accumulated wealth and disposable income required to come up with the down payment and closing costs needed to purchase a home. While they can afford monthly payments. some families have not been able to accumulate enough to cover down payment and closing costs. Fortunately. some charitable organizations have developed programs to help provide down payments to families that would qualify for the mortgage for the FHA program but for. the lack of cash for a down payment. These down payment assistance programs have been successful in expanding homeownership - opportunity for millions of families. The private sector has been working without government intervention to assist individuals and families who lack the necessary funds for down payments and other related costs become home buyers. In fact. Congress looked at the success of these programs when it created the American Dream Downpayment Act. a government program passed in 2003 to provide up to $10.000 in down payment and closing cost assistance to firsttime home buyers. Similarly. H.R. 1852. the bill you are reviewing today. authorizes HUD to allow zero down payment FHA loans for home buyers who could not otherwise make the down payment required under the FHA rule. In the past. HUD has permitted the use of charitable down payment assistance programs in conjunction with FHA insured loans. Recently. however. HUD issued a proposed rule that would effectively eliminate many legitimate down payment assistance providers from assisting in FHA programs. We are hearing that just last week HUD sent a rule over to OMB for final approval. I am very concerned about the- imlact of this proposed rule on homeownership in our country. Rather than going too far by eliminating all down payment assistance providers. all that is really needed is a reasonable and fair criteria by which these programs can continue to operate while also protecting the FHA insurance fund. If there are legitimate problems that have been identified by HUD. then we should absolutely fix these problems. In fact. the full House has agreed that we should strengthen the rules for down payment assistance providers rather than eliminate them completely from the FHA program. In July. the House unanimously passed an amendment I offered with Housing and Community Opportunity Subcommittee Chairman WATERS and Representative AL GREEN to the TransportationHUD appropriations bill. which prohibited HUD from taking any action to issue its final rule or otherwise implement all or any part of the proposed rule. The amendment prevented HUD from finalizing or implementing the rule to end participation of down payment assistance providers in the FHA program. Our argument. then. was that HUDs proposal was too harsh a step and we would work to include language in the FHA bill to fix the problems that HUD has identified with some down payment assistance providers. This is what my amendment before you today seeks to do. The amendment I offer today is a followup on our work during the THUD bill to put the brakes on the HUD rule and instead address the problem HUD has identified with certain down payment assistance providers. This amendment would. put the controls in place to weed out the bad actors while allowing those who help millions become homeowners continue to do the good work they are doing. Unlike the HUD rule. my amendment would preserve the down payment assistance programs participation in FHA while ensuring they are legitimate.and helpful to the home buyers. As you know. H.R. 1582 already includes language to end the practice of inflated appraisals. which was a key argument HUD used against the down payment assistance programs. My amendment builds on this provision and says that down payment assistance providers may participate in FHA so long as the down payment they are offering is truly a gift. in other words. that it reduces the amount owed on the home. My amendment also imposes a net worth requirement on such providers to alleviate the quality and quantity involved within the activity. This provision specifically responds to HUDs complaints regarding the plethora of small. flybynight operators that open up and that close down on a regular basis to avoid regulatory scrutiny. Many of these groups are starting business one day. getting involved in things they should not. and closing down immediately. These three improvements to the current situation. number one. prohibiting inflated appraisals. two. ensuring DPA providers offer an actual gift. and three. imposing a net worth requirement. will weed out the bad actors while not prohibiting all down payment assistance providers from participating in FHA. as the HUD proposal would have done. With limited resources at the Federal level. Congress viewed the American Dream Downpayment Act as a complement. rather than a replacement. to the tremendous work down payment assistance providers were already doing to help build communities. There are simply not enough resources at the Federal level to do this alone. To address * HUDs concerns. we should implement the same underwriting criteria that would be used on the new zero down. payment program within. FHA and what HUD already uses on the American Dream Downpayment Act. If we have comeup with a reasonable system of underwriting to give Federal dollars to assist a family in buying a home. then we can certainly use the same criteria to allow the private sector to put forth people and moneys in these programs to allow people to own their homes. If FA can offer a zero down payment loan under .a given underwriting criteria. as proposed by this bill. then the private sector down payment assistance programs should also certainly be subject to this same criteria. To eliminate the possibility for a million families to own a home through down payment assistance providers but allow them to use the Federal Government for a down payment grant seems -contradictory. If it works for the Federal program. then it should work for the private sector alternative. as well. My amendment addresses the problems with certain down payment assistance providers that HUD has identified. Rather than eliminating all providers. as the HUD rule attempts to do. it puts the protections in place to ensure the home buyers are getting a legitimate helping hand from these charitable entities. Madam Chairman. I ask for an "aye". vote on the amendment. I reserve the balance of my time.