Kerry's senate floor remarks, proposals for foreclosure bill debate

[blm]

WASHINGTON, DC – Senator John Kerry, who successfully included his bi-partisan Mortgage Revenue Bond Proposal in the Senate’s Housing bill, today spoke on the floor of the U.S. Senate advocating for the approach he has introduced, along with Senator Gordon Smith (R-Oregon), to address the foreclosure crisis that has hit Massachusetts especially hard. The Kerry-Smith Mortgage Revenue Bond Proposal aims to help low- and moderate-income families at risk of foreclosure hold onto their homes, move families into homes they can afford, and stabilize neighborhoods rocked by foreclosures and declining home prices, all while providing an immediate boost to the housing market and the economy.


The following is his speech as prepared for delivery:

Earlier this month, the Federal Reserve Bank put up an estimated $400-plus billion to bail out Bear Stearns and other investment banks involved in sub-prime lending and its aftermath. The government showed that when there’s trouble on Wall Street, they act fast.

Sure, we have to fix the troubles on Wall Street because there is the potential for a domino effect which could inflict even greater damage on the economy. But we need to show the same commitment to those Americans who are struggling every month just to pay their mortgage loans and keep their homes. As many as 8,000 foreclosures are occurring daily. Some of these loans were predatory, and some came from the very same lenders that the Fed just bailed out! I commend Majority Leader Reid for his continued efforts to bring the plight of our homeowners to the attention of Congress and the Bush Administration.

The situation in Boston has gotten so bad that Mayor Tom Menino recently opened up a “war room,” where city officials can work together to fight the wave of foreclosures we’ve seen in recent days. Just this weekend I went to a Homeowner Foreclosure Prevention Workshop at Madison High School in Boston. We ought to show the same sense of urgency here in Congress.

Nationwide, 2.5 million mortgages were in default by late 2007—40% more than just two years earlier. Communities across Massachusetts are being hit hard. Last January, foreclosures in Massachusetts alone were up 128% from the previous year. The foreclosure rates of five Massachusetts metro areas are in the nation's top 100.

How did we get here? The fundamental problem is that lenders lowered their standards but didn’t appropriately plan for the increased risk they had incurred. They flooded the market with mortgage loans, ignoring the risks to borrowers and to their own bottom line. Since 2000 I have been concerned about predatory lending and have supported legislation to stop the excesses that these lenders have too often hoodwinked homeowners into accepting. At the same time, some borrowers inflated their incomes and misrepresented themselves in order to get a bigger home than they could actually afford.

Today we’re living with the results. There’s blame enough to go around, but what hasn’t been shared is the help to solve the problem. Lenders are getting help, but we also need to help well-intentioned homeowners who, with a little assistance, can make their payments and avoid foreclosure and a downward spiral into bankruptcy.

Earlier this week, I went to Lawrence, Massachusetts to meet with homeowners who are facing foreclosure. Approximately 700 homes were foreclosed in Lawrence last year alone and unfortunately, this number is only expected to rise for 2008.

I talked to Rosa Hernandez, who has four children and worked two jobs, one as a nursing assistant at a local nursing home, to support her family and earn enough to own her home. Rosa did everything she could to make her house a home. She fixed the roof, bought a new boiler, and updated the electrical system of her new house. After Rosa was hospitalized twice last year, she could no longer work two jobs. At the same time, her subprime mortgage interest rates went up from 4.5% five years ago to 7.5%. Rosa told me, through a translator, that when she couldn’t make the payments, her lender refused to make a loan modification that would allow her to stay in her home. She could have still made the payments on the home for the amount it was sold for. She asked the lender to work with her to stay in her home. Unfortunately, the lender refused. Now, Rosa and thousands of families just like hers are forced to start over again.

Each time a home is foreclosed upon, a family's economic dreams lies in tatters. And it's not just the family facing foreclosure that suffers-- neglected buildings can bring urban blight, lower property values, increase crime rates and destroy entire neighborhoods. According to the US census, by late 2007 a higher percentage of homes in the Northeast sat vacant than at any time in the last 50 years, and probably since the Great Depression.

Today, we are debating the Foreclosure Prevention Act of 2008, comprehensive legislation that will address the problems spawned by the housing crisis. This legislation reflects a bipartisan compromise. It is a good first step toward addressing the housing crisis. The Foreclosure Prevention Act of 2008 includes a provision which Senator Smith and I tried to include in the stimulus bill, to provide an additional $10 billion of tax-exempt private activity bonds to housing finance agencies. The provision would allow the proceeds from the bonds to be used to refinance subprime loans, provide mortgages for first time homebuyers and for multifamily rental housing. This means $211 million in targeted mortgage relief to the homeowners of Massachusetts. I want to thank Chairmen Baucus and Dodd for their efforts to include this important provision in the final bill as it has enormous potential to help keep struggling families in their homes.

In 2006, state and local governments financed 120,000 new home loans with mortgage revenue bonds. With the additional $10 billion in funding, states and localities can equal that amount and finance approximately 80,000 more home loans. According to the National Association of Home Builders, every mortgage revenue bond new home loan produces almost two full-time jobs, $75,000 in additional wages and salaries and $41,000 in new federal, state and local revenues. Each new home loan results in an average of $3,700 in new spending on appliances, furnishings, and property alterations –providing an even bigger shot in the arm for our economy.

The reason this MRB proposal is so important is that too many lower-income families are having difficulty getting a mortgage or refinancing an existing mortgage. This additional funding will make it easier for families facing foreclosure and first-time homebuyers to get access to a safe, fair mortgage. The goal is simple - - we want to provide assistance to those that need it most. Just think - - an extra $10 for this program is a proven way to help homeowners like Rosa Hernandez stay in their homes.

In addition to the mortgage revenue bond provision, this legislation includes a host of other important provisions which will help with the housing crisis. The $4 billion for the Community Development Block Grant program will help local communities on the front lines in the fight to end our housing crisis. Earlier this year, Senator Kennedy and I sent a letter to Leadership underscoring the need for additional funding for CDBG because - as every Mayor in Massachusetts knows - CDBG is the best way to help local governments tackle serious housing challenges.

This legislation also specifically addresses the foreclosure concerns of our returning veterans. Those who served this country in Iraq and Afghanistan should never come home to a home in danger of foreclosure. It extends the foreclosure grace period from 90 days to nine months. It also extends the freeze on mortgage interest rates for the first year a soldier is home. Earlier this year, I introduced legislation to address these two provisions. I thank Senator Dodd for his work to include these provisions in the bill. Nobody wants to see Iraq and Afghanistan veterans joining their brothers who served in Vietnam among the ranks of homeless vets. We owe these men and women more than a polite thank you and best wishes. We owe them the security and peace of mind that this legislation offers.

We will need to continue to work on legislation to address housing issues. The cost of decent and safe, privately-owned rental housing is simply out of reach for too many working families and their children. A record 37.3 million households pay more than 30 percent of their income on housing costs and more than 17 million are paying more than half their incomes on housing costs. And as we consider additional solutions to the housing crises down the road, it’s important to keep in mind that we can create jobs while easing the affordable rental housing crisis through passage of the Affordable Housing Trust Fund that Senator Snowe and I have introduced. The goal of the Trust Fund is to construct, rehabilitate, and preserve 1.5 million units of housing over the next 10 years.

I urge my colleagues to support the Foreclosure Prevention Act of 2008. Until we address the housing crisis, arguably the single largest contributor to our economic slow-down, we will have failed to tackle the greatest source of economic anxiety for most Americans. We in Congress must finally take action to help hardworking families everywhere to stay in their homes.

[texastoast]

1. Wonder what my chances are with John Cornyn and Kay Bailey?

Is there a bill # I can reference when I call their offices in addition to the act's title?