Pelosi Statement on U.S. Conference of Mayors Report on Mortgage Foreclosure Crisis

'Today, the U.S. Conference of Mayors released a significant report warning of the impact of the mortgage foreclosure crisis - a weakening of our economy and the economic security of American families.  As individuals struggle with the subprime mortgage crisis, the report concludes that its impact could be nationwide, with weak residential investment, lower spending in the construction industries, and curtailed consumer spending.  This demands serious solutions.

'Already this year, and with the support of America's mayors, the House has taken swift action to help families struggling to make mortgage payments and avert this potential economic downturn.  With bipartisan support, we have reformed the Federal Housing Administration so it can help people at risk of foreclosure stay in their homes with affordable loans and refinancing options; taken comprehensive anti-predatory action to prevent bad loans from being made in the first place; and expanded housing counseling for distressed families who are at risk of losing their homes.'

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FACT SHEET

November 27, 2007

New Direction Congress Taking Swift Action on

Subprime Housing Crisis

Reform FHA to Expand American Homeownership:  In September, the House passed a bipartisan bill to enable the Federal Housing Administration (FHA) to serve more subprime borrowers at affordable rates and terms, recapture borrowers that have turned to predatory loans in recent years, and offer refinancing loan opportunities to borrowers struggling to meet their mortgage payments in the midst of the current turbulent mortgage markets.  These reforms, including provisions to lower down payments and increase loan limits, would help some 200,000 additional families, if not more, purchase or refinance into safe FHA-insured mortgages. (Expanding American Homeownership Act of 2007, H.R.1852)

Prevent Future Subprime Crisis/ Strengthen Protections Against Risky Loans:  To prevent these bad loans from being made in the first place, the House has passed comprehensive anti-predatory lending legislation -- making sure that consumers get mortgages they can repay, strengthening consumer protections against reckless and abusive lending practices, and giving consumers the ability to seek redress.  This bipartisan bill will make sure that the mortgage industry follows basic principles of sound lending and consumer protection, ensuring that: borrowers receive clear disclosures about the loans they are offered, borrowers are not 'steered' into more expensive mortgages, special consumer protections are strengthened for high-cost loans, and all mortgage bankers and bank loan officers are licensed or registered.  (H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007)

End Taxes on Mortgage Debt Forgiveness:  The House passed a bipartisan bill to end the tax on phantom income when a lender forgives some part of a families' mortgage in foreclosure. Under current law, the debt forgiven following mortgage foreclosure or renegotiation is considered income for tax purposes, resulting in tax liability for individuals and families.  The bill provides tax relief by permanently excluding this mortgage debt forgiven under these circumstances from taxes.  (H.R 3648, Mortgage Forgiveness Debt Relief)

GSE Reform/Make Fannie Mae and Freddie Mac Loans Part of the Solution:  The House has passed comprehensive and bipartisan GSE legislation (H.R. 1427) to improve the regulation of Fannie Mae and Freddie Mac, and the Federal Home Loan Bank system. The bill raises the GSE loan limits for single family homes in high cost areas, so that these entities could purchase more loans in higher cost areas (lowering interest rates for new homes and refinancings in those areas). These government-sponsored enterprises (GSEs) provide liquidity to the mortgage markets by buying loans already made, freeing up money for new mortgages and refinances.

Housing Counseling to Prevent Foreclosures:  The House has passed legislation to invest $200 million for housing counseling to assist many distressed homeowners who are trapped in unaffordable loans to prevent foreclosure. (Conference Report on H.R. 3074, Transportation Housing Appropriation)

Affordable Housing:  The House has passed legislation to establish a national affordable housing trust fund to build or preserve 1.5 million homes or apartments over the next 10 years, without increasing the federal deficit.  Increasing the supply of affordable housing will help ensure that families who have lost their homes due to predatory lending or a family financial crisis, such as ill health or job loss, can find housing. (H.R. 2895, National Affordable Housing Trust Fund Act of 2007)

More Progress to Come:  Congress Will Act to Strengthen Protections

Fair Treatment for Homeowners in Bankruptcy:  The House Judiciary Committee is considering legislation to prevent up to 600,000 Americans from losing their homes in bankruptcy over the next two years -- by giving bankruptcy judges the ability to revise mortgage contracts on primary mortgages, much as they already do when sorting out payments to other kinds of creditors and other mortgages, such as vacation homes.  This bill will permit bankruptcy courts to give homeowners more time to pay their mortgages with more reasonable interest rates. (H.R.3609 Emergency Home Ownership and Mortgage Equity Protection Act of 2007, Rep. Brad Miller)