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S.2636 Title: A bill to provide needed housing reform. Sponsor: Sen Reid, Harry (introduced 2/13/2008) Cosponsors (25)
Related Bills: H.R.4019, S.2136, S.2153
Latest Major Action: 2/14/2008 Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 577.
Jump to: Summary, Major Actions, All Actions, Titles, Cosponsors, Committees, Related Bill Details, Amendments
SUMMARY AS OF:
2/13/2008--Introduced.
Foreclosure Prevention Act of 2008 - Amends the Internal Revenue Code to: (1) authorize proceeds of a qualified mortgage issue to be used to refinance a mortgage on a residence originally financed through a qualified subprime loan; (2) raise the ceiling imposed upon certain state housing bonds; and (3) redefine private activity bonds in connection with tax preference items to exempt interest on certain qualified mortgage bonds or veterans' mortgage bonds issued after the date of the enactment of this Act and before January 1, 2011, for purposes of the alternative minimum tax.
Makes appropriations for: (1) emergency needs of states and local governmental units to redevelop certain abandoned and foreclosed homes; and (2) the Neighborhood Reinvestment Corporation--Payment to the Neighborhood Reinvestment Corporation for foreclosure mitigation activities.
Waives the counseling prerequisite upon certification that a debtor's principal residence is scheduled for foreclosure.
Helping Families Save Their Homes in Bankruptcy Act of 2008 - Authorizes a bankruptcy plan for individuals with regular income to: (1) modify an allowed secured claim secured by the debtor's principal residence if the debtor's income is insufficient to retain possession of the residence by curing a default and maintaining payments while the case is pending; (2) provide for payment of such claim for a period not to exceed 30 years; (3) permit the addition of certain costs to secured debt under specified circumstances; and (4) waive any prepayment penalty on a claim secured by a debtor's principal residence.
Permits the debtor to proceed as the real party in interest under specified circumstances.
Authorizes the bankruptcy court, in certain proceedings involving an individual debtor with primarily consumer debts, to hear and determine the proceeding and to enter orders and judgments in lieu of arbitration.
Creates a principal residence homestead exemption for debtors over 55 years of age.
Directs the bankruptcy court to disallow claims or interests subject to any remedy for damages or rescission due to noncompliance with state or federal consumer protection law, notwithstanding a prior foreclosure judgment.
Mortgage Disclosure Improvement Act of 2008 - Amends the Truth in Lending Act to set forth disclosure requirements governing certain extensions of credit secured by the dwelling of a consumer.
Increases the actual damages for which a creditor is liable for noncompliance with such Act in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling. Replaces the current range of damages from $200 to $2,000 with a flat damages amount of $5,000, adjusted annually for inflation.
Amends the Internal Revenue Code to: (1) set forth carryback rules for net operating losses for specified taxable years; and (2) modify the limit on certain net operating losses carrybacks and carryovers.
MAJOR ACTIONS:
***NONE***
ALL ACTIONS:
2/13/2008:
Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time.
2/14/2008:
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 577.
TITLE(S): (italics indicate a title for a portion of a bill)
***NONE***
COSPONSORS(25), ALPHABETICAL : (Sort: by date)
Sen Boxer, Barbara - 2/25/2008
Sen Brown, Sherrod - 2/28/2008
Sen Cardin, Benjamin L. - 2/25/2008
Sen Casey, Robert P., Jr. - 2/28/2008
Sen Clinton, Hillary Rodham - 2/25/2008
Sen Dodd, Christopher J. - 2/25/2008
Sen Durbin, Richard - 2/25/2008
Sen Feinstein, Dianne - 2/25/2008
Sen Harkin, Tom - 2/26/2008
Sen Kennedy, Edward M. - 2/25/2008
Sen Kerry, John F. - 2/25/2008
Sen Klobuchar, Amy - 2/25/2008
Sen Lautenberg, Frank R. - 2/25/2008
Sen Lieberman, Joseph I. - 2/25/2008
Sen Menendez, Robert - 2/25/2008
Sen Mikulski, Barbara A. - 2/25/2008
Sen Murray, Patty - 2/25/2008
Sen Nelson, Bill - 2/27/2008
Sen Obama, Barack - 2/25/2008
Sen Reed, Jack - 2/25/2008
Sen Rockefeller, John D., IV - 2/26/2008
Sen Salazar, Ken - 2/25/2008
Sen Schumer, Charles E. - 2/25/2008
Sen Webb, Jim - 2/28/2008
Sen Whitehouse, Sheldon - 2/25/2008
COMMITTEE(S):
***NONE***
RELATED BILL DETAILS: (additional related bills may be indentified in Status)
Bill: Relationship:
H.R.4019 Related bill identified by CRS
S.2136 Related bill identified by CRS
S.2153 Related bill identified by CRS
AMENDMENT(S):
***NONE***
Dodd's speech from his website:
Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, today spoke on the Senate floor on the housing crisis, the housing stimulus package proposed by Majority Leader Harry Reid (D-NV), and his efforts as Chairman to curb the unprecedented wave of foreclosures in order to help Americans keep their homes.
“Inaction is not an option,” said Dodd. “And frankly, failure is not an option, either. Every day that passes creates new risks for the financial future of our nation. We cannot hope that this problem will simply solve itself. Our competitors in the global economy are the only ones who will benefit if we do nothing to effectively stem the rising tide of foreclosures that is hurting families, communities, the credit markets, and the overall economy.”
Senator Dodd’s full remarks as prepared are below:
Mr. President: I rise to speak on a matter of great importance before the Senate and before the nation, our current housing crisis. This is a pivotal week to address the problems that are before us. We have a real opportunity to take strong and effective steps that can address the economic crisis by reducing foreclosures and unlocking the credit markets.
About a month ago, Majority Leader Reid brought a bill to the Floor, the Foreclosure Prevention Act. Unfortunately, progress on that bill was blocked and we were unable to even debate the bill.
Since then, the challenges facing American homeowners have only grown worse. In the month of February, 223,651 more Americans entered into foreclosure, according to RealtyTrac— a company that collects real estate-related data. That amounts to 7,712 foreclosure filings per day in the month of February. If that foreclosure rate continues – and all indications are that it is actually increasing – almost 240,000 more Americans will have been foreclosed upon during the month of March. UBS reports that foreclosures of this magnitude are on par with the severity of foreclosures during the Great Depression.
These foreclosure rates are not simply high in relative terms. They are at record levels, according to the Mortgage Banker’s Association (MBA). The Mortgage Bankers’ data show that more than 1 in every 50 homes with a mortgage in the country is in foreclosure. Foreclosure rates have been growing at record levels for some time.
Foreclosures are increasing because people are continuing to struggle to make their payments. The data tells us that 1 in every 13 homes with a mortgage has fallen behind on their mortgage. Every day that goes by without action means more families are losing their homes.
Compounding the problem, home prices continue to fall nationally. Home prices are down over 10 percent nationwide over the past twelve months and they continue to fall. This is the first time we have experienced such a steep and widespread decline in home prices since the Great Depression.
Merrill Lynch is predicting that home prices will fall by 15 percent this year and by another 10 percent next year. The home that was worth $200,000 a year ago is now worth $180,000. American families are losing wealth while we in the Senate have been waiting to even discuss potential legislation to address these problems.
While we have waited, our country has lost more jobs. We learned that in the month of February, the American economy lost over 100,000 private sector jobs. We have lost private sector jobs in each of the last three months. With job losses mounting at the same time that mortgage payments are rising, families are falling farther and farther behind in their ability to pay the mortgage, make the car payments, buy the groceries, and educate the kids.
At the same time, the cost of these essentials is rising. Inflation has risen by 4 percent over the past year, far outstripping growth in wages. American families have to do more with less. They have to find a way to pay the bills that keep rising, while the value of their home keeps falling and their job prospects continue to decline. It is no wonder then that consumer confidence continues to fall, reaching record lows that have not been seen, by some measures, since the early 1970’s.
We are clearly in the midst of a recession. How severe the recession gets, we do not know. The answer to that question lies in part to what we here in the Senate will do to confront the challenges that we face. The legislation that is before us, which my colleague the Majority Leader has brought to the floor, will help address the problems we are facing in the housing and mortgage markets in a number of ways by providing counseling services, dealing with bankruptcy reform, improving disclosures, increasing the availability of mortgage revenue bonds, and appropriating emergency funds for local communities struggling with foreclosed and abandoned properties. I commend Majority Leader Reid for his leadership.
These provisions can make a real difference for homeowners, communities and our nation’s economy. They are meaningful. But they are also, I might add, modest, particularly in relation to some of the Administration’s recent actions. The Administration just took historic action to support the takeover of Bear Stearns by JP Morgan Chase. This action was a major commitment of taxpayer money, $30 billion. The Senate Banking Committee will conduct a hearing later this week on this and other recent actions by the Treasury, the Fed, and other federal agencies to address the recent turmoil in the financial markets. Without prejudging the outcome of our oversight and investigation of this unprecedented commitment of taxpayer money, one thing is clear: it’s now time to turn our attention to Main Street.
As bold as the action was to help Wall Street, we must be bold to help the millions of Americans who live on Main Street. Inaction is not an option. And frankly, failure is not an option, either. Every day that passes creates new risks for the financial future of our Nation. We can not hope that this problem will simply solve itself. Our competitors in the global economy are the only ones who will benefit if we do nothing to effectively stem the rising tide of foreclosures that is hurting families, communities, the credit markets, and the overall economy.
The question is not whether we should act, but rather how. The Majority Leader has laid out what I believe are a series of responsible policies that will help American families keep their homes and help communities all throughout the nation deal with the foreclosure crisis. I want to briefly describe several of the critical elements of this package.
The legislation increases funding for foreclosure prevention counselling. Foreclosure counselors can act as advocates to help borrowers get the modifications they need. This is a proven way to help people keep their homes. I met with constituents in Connecticut over the recess who are utilizing resources appropriated on a bipartisan basis by this Senate to reduce foreclosures. One woman saved her home with the help of a non-profit that brought her and her lender to the table to re-structure her mortgage. We need to expand this effort, and this legislation is an important step to doing so.
In addition to effectively fighting foreclosures, we must limit the damaging impact that foreclosures inflict on our communities and our broader economy. That is why we need to help our local communities cope with the serious economic and social problems vacant properties create. A single foreclosure can have devastating consequences on a community – lowering property values, leading to more foreclosures, and increasing crime rates. Studies have shown that property values for each home located within one-eighth of a mile of a foreclosed home drop by an average of $5,000 when a home is foreclosed upon. Given the record levels of foreclosure, we are facing the possibility that 44 to 50 million American homeowners will see their home values fall – their wealth literally eroded under their feet – because of a foreclosure in their neighborhood.
Towns and cities that have been most adversely affected by the foreclosure crisis desperately need some assistance to get foreclosed and abandoned properties back into the hands of qualified homeowners. To help do this, the legislation provides an emergency appropriation of $4 billion for the Community Development Block Grant program (CDBG). Four billion dollars is a modest sum compared to the need, and compared to the hundreds of billions of dollars that has been made available to Wall Street in the form of discounted loans, special credit facilities, and guarantees.
The Leader’s bill also includes a Finance Committee provision that would allow state housing finance agencies to use proceeds from mortgage revenue bonds to help extend mortgage credit to people now trapped in predatory loans as well as new homeowners. It would also help expand affordable rental housing – helping people who need a place to go if they can’t hang on to their homes.
Sen. Durbin’s bankruptcy provision could help more than 600,000 homeowners by allowing them to modify their mortgages in bankruptcy. It would treat primary residences the same as vacation homes and family farms. It’s hard to argue with that logic. I know that some of our colleagues are concerned about this provision. But I’d hope they’d come to the table and try to work something out with Sen. Durbin.
Senator Jack Reed has a provision in the legislation that will improve disclosures to borrowers, and make those disclosures available sooner in the mortgage shopping process. This provision will help borrowers avoid the kinds of abusive loans that are leading to so many foreclosures today.
Now I understand that there are other ideas and proposals out there to address the housing and foreclosure crisis. I hope we’ll have a chance to consider them. Many colleagues, on both sides of the aisle, have good ideas.
I want to briefly mention a few of the steps that are needed in addition to the legislation that the Majority Leader has brought to the floor.
First, we need to finish the job and enact legislation to modernize the Federal Housing Administration (FHA). I worked closely with Senator Shelby, the Ranking Member of the Banking, Housing, and Urban Affairs Committee, and the Administration, and we were able to pass FHA reform legislation through the Senate by a vote of 93 to 1. We have been working with the House to resolve our differences on that legislation. Modernizing the Federal Housing Administration is a critical step to responding to the housing crisis. We have moved the ball all the way to the edge of the goal-line and now we just need a final push to get us across the goal, so that we can help stem the tide of foreclosures and give many Americans the tools they need to keep their homes.
I believe that we need to enact comprehensive reform of the government sponsored enterprises (GSEs). I am committed to working with Senator Shelby and the Administration to pass a GSE regulatory reform bill so that Fannie Mae, Freddie Mac, and the Federal Home Loan Banks will be well-regulated and can expand their efforts to help people afford to buy and keep their homes.
In addition, I believe that we need to establish a new way to deal with the unprecedented wave of foreclosures that threatens American families, the financial markets, and our economy. To that end, I have drafted legislation entitled the HOPE for Homeowners Act. The legislation closely mirrors the approach recommended by Federal Reserve Chairman Ben Bernanke and it has been approached by people across the ideological spectrum – including the American Enterprise Institute and the Center for American Progress.
The HOPE for Homeowners Act would create a new initiative within the Federal Housing Administration to refinance mortgages of distressed homeowners. Our proposal creates no new bureaucracy ?? but rather uses the existing platforms of the FHA – which for seven decades has built a track record of supporting safe, stable, dependable mortgages.
Our proposal is not a bailout.
It would provide no windfall to anyone.
Everyone would take a financial hit – homeowners, lenders, and investors. But we aim to spare people a level of pain, loss, and uncertainty that would only drive our markets and our economy further in a downward spiral.
I have spoken about this proposal with a number of my colleagues from both sides of the aisle, including Ranking Member Shelby, Sen. Gregg, my counterparts in the House, and others. I have spent weeks collecting feedback on this proposal from a broad range of consumer groups, market participants, economists, and regulators who believe that the historic economic times we are living in require the type of action proposed in our bill. I look forward to the comments and suggestions others may have on the HOPE for Homeowners Act so that we can all work together to provide a much-needed tool for lenders and servicers to re-finance distressed mortgages and help restore liquidity and confidence in our mortgage markets.
In conclusion, I am hopeful that my colleagues, Republican and Democrat alike, will agree to move forward on the bill before us today. As Sen. Reid has indicated, he is willing to work with the Republican Leader. There are good ideas on both sides of the aisle and we ought to be able to come together and work through our differences. Again Mr. President, these are historic times we are living in that require urgent action by this body. Home prices are falling nationally for the first time since the Great Depression. There are serious problems on Wall Street that have resulted in the Federal Reserve and the Administration using legislative authority that has been dormant since the 1930s. Our nation is in a recession and Americans are facing a combination of rising prices and job losses that have sent consumer confidence down to the lowest point, by some measures, since the severe recession of the 1970s.
Today we face a choice: will we come together and begin to work through our differences or will we continue to do nothing. It has been almost a month since we last faced this choice. Since then, we have learned that we have lost over 100,000 private sector jobs. Millions of American families have lost thousands of dollars of wealth as their home prices have fallen. Each and every day almost 8,000 Americans see their homes enter into foreclosure. These are the very real costs associated with inaction. These costs affect everyone. Now is not the time for inaction. I urge my colleagues to join us in beginning this debate. Let’s work together to pass legislation to help Americans keep their homes and help our communities confront the dangerous tidal wave of foreclosures that is upon us. I urge my colleagues to vote for cloture.
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