Media

February 5, 2009

FLOOR SPEECH: FIX HOUSING FIRST ACT


As Prepared for Delivery
February 5, 2009
 
Mr. President, without a doubt, the collapse of the housing market is at the root of the economic crisis facing every single American.  Just a few short years ago, in my home state of Nevada, housing prices were through the roof.  If you were in the market for a home, you had to act quickly and plan on a bidding war.  For a while, it seemed like there were more realtors and mortgage brokers than blackjack dealers. 
 
The housing storm blew through many communities in our country at high force, and the aftermath has been brutal.  If you don’t live in an area with a lot of foreclosures, let me describe the situation.  You drive home from work to find one home—or several homes—in your neighborhood with dead lawns.  That’s the first sign.  Then the “For Sale: Bank Owned” sign pops up on the lawn.  But the most painful part is when you find out how much that foreclosed house, down the street from yours, is going for.  It is part of the reason that consumer confidence is at such an all-time low.  When you find out that the biggest investment you have—the property that gives you leverage in this economy—is worth less than what you bought it for, it creates a sense of panic. 
 
Left much worse off are the people who have lost jobs, been unable to pay their mortgages, and soon found themselves losing their homes.  Nevada leads the nation in foreclosure rates, so these stories are a reality for too many of my constituents and too many families across the country. 
 
If we don’t figure out a way to get this housing market back on track, nothing we do in the name of economic stimulus will matter.  It has to be our number one priority.  If we can fix housing first, bring security to homeowners and stabilize the housing markets and financial markets, our economy can begin to heal and grow again.
 
To do that, we absolutely must increase home sales and decrease foreclosures.
 
It sounds like an impossible task in light of the current economic climate.  But, if we don’t succeed, our economy will continue to crumble under the weight of the failed housing market.  We just don’t have a choice.
 
I have a plan that will jumpstart the housing market and breathe life back into our economy.
 
It’s very simple.  A lower mortgage rate will provide more than 40 million creditworthy homeowners with what is basically a $400 a month tax cut for 30 years.
 
Here’s how it works.  American homeowners would be able to refinance their current mortgages or finance the purchase of a home for between 4 and 4.5%.  Homeowners who hear about this proposal immediately begin to do the math.  You can literally see their eyes light up as they realize how this will benefit them.
 
It equals, on average, $400 a month in savings—a savings of up to $150,000 over the course of a 30-year loan.
 
That $400 a month will make a huge difference in the budgets of most families.  And for many families who are barely hanging on, it could mean that they get to stay in their homes.  Just think what your family could do with an extra $5,000 a year.   
 
Banks would issue these government-backed, lower fixed-rate mortgages on primary residences.  And they would be available until the end of 2010.  The new lower rate would be based on the historic spread between the 10-year Treasury bill and the 30-year fixed mortgage rate.
 
The cost of the program is $300 billion, but economists believe it would actually be much less.  It translates into $6.1 trillion in savings to homeowners over the course of the 30-year loan.  We invest $300 billion and homeowners get $6.1 trillion.  That’s an investment we cannot afford to pass up. 
 
It’s also time to expand the current tax credit for first-time homebuyers.  We need to encourage every creditworthy potential homebuyer to jump into the market, so we should expand the credit to all homebuyers and cover all properties, not just vacant or foreclosed properties.  And we need to increase the credit to $15,000.  This will encourage those who are watching and waiting to make the move and buy a home.
 
And we need to help people stay in their homes.  The onslaught of foreclosed properties in Nevada and across the country is a significant hurdle to an economic recovery.  They bring down property values and drag down consumer confidence.  Privately securitized mortgages are at the core of the problem. These are mortgages that were originated without a guarantee from government-sponsored entities.  They account for more than 50% of foreclosure starts, despite accounting for only 15% percent of all outstanding mortgages.
 
The Fix Housing First Act includes temporary incentives for privately held securitized mortgages to be modified.  That would allow homeowners facing foreclosure to pay lower monthly payments and stay in their homes.  It also provides temporary legal protection for those who do loan workouts in good faith.  These two steps eliminate the economic and legal barriers that are currently preventing many homeowners from modifying their loans.  This will have a huge impact on families who may be slightly under water on their loans but who are anxious to stay in their homes.
 
Unfortunately, more than 860,000 properties were repossessed by lenders last year.  That means that nearly one million families lost their homes.  It was easy, for a while, to blame irresponsible homeowners for taking risky loans and playing the system.  But the cancer caused by the housing crisis has spread to every aspect of our economy: our financial markets, employment, the auto industry, retailers, and state budgets.  The list goes on and on.
 
If we want to heal our economy, we have to start with housing.  Mr. President, we have to fix housing first, and this proposal will do that.
 
But we also need properly targeted tax relief for American families and businesses that will put cash back into the hands of tens of millions of American households.
 
Let’s make sure that all taxpaying American families see immediate relief, whether they own a home or not.  We can do this by reducing the lowest individual tax rates from 15% to 10% and from 10% to 5%.  The average combined benefit of these cuts for middle-class families would be about $1700 for an individual filer.
 
We need to give small business a major boost.  They create 80 percent of our jobs, and to ignore their role in a recovery is irresponsible.  They are the engine of our economy and time and again they have pulled us out of a recession.
 
Extending bonus depreciation, eliminating capital gains taxes for start-ups and certain small businesses, and investing in broadband access are all measures that will spur job creation and help get this country back on its feet.
 
Finally, the Fix Housing First Act eliminates the laundry list of wasteful spending items in the current stimulus bill.  The emphasis needs to be on housing and targeted tax relief not pet projects that bury future generations under insurmountable debt.
 
Mr. President, Americans are hurting right now.  Many have lost jobs, many have lost homes, and almost all are losing hope in this economy.  While they were supportive of a stimulus bill at first, they have grown more hopeless over Democrat attempts to spend their way out of this crisis.  They understand that spending $1.2 trillion on programs that will do nothing to stimulate the economy is destructive and will only lead us into a deeper recession.  The Democrats may be working on a job security plan for government programs, but we need a plan for American homeowners, workers, and businesses.     
 
I challenge my colleagues.  Let’s sit down and do this right.  When we rush things through, we make mistakes.  We should act quickly, but doing something wrong quickly, doesn’t make it right.  Let’s join together as Americans, take good ideas from both sides, and do what’s right to fix this economy.
 




February 2009 Floor Statements

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