Washington, D.C. – Today, Congressman John D. Dingell (D-MI15), issued the following statement for the record opposing H.R. 830, the FHA Refinance Program Termination Act:
“Mr. Speaker, I rise in opposition to H.R. 830, a hasty political ploy that will terminate a promising program. I refuse to let my Republican colleagues, crazed with appearing fiscally austere at any cost, cut budding initiatives that are in the best interest of the country.
“The FHA Refinance Program is tailored to benefit responsible homeowners — homeowners who, through principal write-downs, will be able to stay in their homes. It is also structured to protect lenders from possible foreclosure losses and save communities from increased blight. Ten states, including my home state of Michigan, posted foreclosure discounts of more than 35 percent in 2010. We must use all our tools at hand to stem this massive foreclosure epidemic.
“I hear daily from struggling homeowners who are trying to keep afloat. Negative equity mortgages are plaguing our country from coast to coast. At the end of last year, 11.1 million, or 23.1 percent, of all residential mortgages were in negative equity. In Michigan, over 36 percent of mortgages were in negative equity. Home prices are expected to fall another five to ten percent in 2011. Millions of borrowers are being held captive in their homes, unable to move or sell their properties. Keeping programs like the FHA Refinance Program alive is crucial to spurring economic recovery and giving the mortgage industry the jump-start it so desperately needs.
“My Republican colleagues like to point to the fact that since the program has only spent $50 million, it must be ineffective. I find it interesting that a Republican argument against a program is that it hasn’t cost the government enough. So much for fiscal austerity. In fact, the FHA Refinance Program was specifically designed to be cost-effective for the government. Its allocated funds only cover incremental credit and incentive costs, and will not be spent unless a borrower defaults under the program. Since no borrowers have defaulted, no money has been spent on loans.
“Let us not forget how hasty this bill is — the FHA Refinance Program has only been available since September. It is no surprise that it takes time for such complex programs to work effectively and prudently. Lenders must set up an operational infrastructure to utilize this option, and a great deal of coordination is required throughout the mortgage chain. As of February 11th, 23 FHA-approved lenders are participating in the program, including Wells Fargo and GMAC/Ally, which intend to deliver several thousand loans. FHA also indicates that numerous other lenders are in the process of developing the capability to utilize the program by midyear.
“Not only does the Republican Leadership seek to terminate the FHA Refinance Program, but it also seeks to terminate the Home Affordable Modification Program, the Neighborhood Stabilization Program, and the Emergency Homeowners Loan Program. It is clear that more needs to be done to help struggling homeowners stay in their homes. However, terminating the very programs that were established to do so is not the solution. I encourage my colleagues on the other side of the aisle to come to the table and present real solutions to this epidemic. If a Member feels this program has not benefited enough homeowners, he or she should suggest a way to do so and we can go from there. Instead, Republicans are placing politics before people. Our Nation needs solutions, not denunciations.
“Mr. Speaker, I strongly urge my colleagues to vote against this bill and yield back the balance of my time.”
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