Sen. Carper’s Improvements In Housing Bill Help Families Facing Home Foreclosure

Urges President To Quickly Sign Bill to Better Protect Delaware Homeowner

WASHINGTON – One of the most important housing bills in decades won the support of Sen. Tom Carper (D-Del.) today, who said it offers a lifeline to America’s struggling homeowners and helps restore investor confidence in the housing finance industry and the U.S. economy.


Sen. Carper urged the President to quickly sign the Housing and Economic Recovery Act (H.R. 3221) as a vital step toward putting the economy on the road to recovery, stemming the tide of home foreclosures and continuing to make homeownership an affordable dream for all Americans.

The senator stressed that this comprehensive housing bill is important to: 1) Restore confidence in the housing markets and provide a stronger regulator for mortgage giants such as Fannie Mae and Freddie Mac; 2) Keep Americans in their homes by avoiding foreclosure; 3) Provide funds for more affordable housing construction; and 4) Give more Americans access to safe and affordable mortgages backed by the Federal Housing Administration.

“This bipartisan compromise lays the groundwork to turn around our housing market and hopefully our overall American economy, and all without rewarding bad behavior,” Sen. Carper said. “This is comprehensive housing reform legislation that helps Delawareans stay in their homes, buy new homes and improve the quality of life for their families.”

Today’s final Senate approval means the bill goes to the President who earlier this week said he will now sign this housing bill into law.

Key housing and financial improvement measures that Sen. Carper fought to have included in this large Senate housing bill are:

GSE Reform legislation: The bill will increase regulatory oversight of the GSEs (Fannie Mae, Freddie Mac and the Federal Home Loan Banks), which several years ago were plagued by a series of accounting scandals. This bill creates a strong, independent regulator with broad authority over new mortgage products, as well as the GSEs’ investment portfolios and capital requirements. The regulator’s primary responsibility will be to ensure the safety and soundness of the GSEs, having the power to promptly correct action if necessary, similar to other banking regulators. 

“The GSEs are really the backbone of this nation’s mortgage system. If they’re not healthy, fewer people will get safe home loans and our nation’s housing industry will suffer immeasurably,” said Sen. Carper, who has been a primary advocate for GSE reform in the Senate. “This bill will help restore confidence in our nation’s housing finance system so we can start moving homeownership in the right direction again.”

Included in this portion of the housing bill is a provision authored by Sen. Carper to help lower-income homeowners refinance their mortgage. This $75 million fund would benefit families hurt by the subprime credit scandal or slumping housing market and will cost taxpayers nothing. Sen. Carper’s provision reallocates funds which are already set aside by the 12 federal home loan banks for affordable housing programs. 

It includes another amendment authored by Sen. Carper requiring the GSE regulator to conduct a study that ensures the federal home loan banks do not accept predatory loans as collateral from their member banks. Because Wall Street investors are no longer purchasing predatory mortgage securities, Congress must ensure these same loans do not find their way back into the system through the Federal Home Loan Banks.

HOPE for Homeowners Act:  To help reduce the number of home foreclosures, this bill creates a four-year, voluntary program within the FHA to refinance distressed homeowners into insured, long-term loans. This measure only helps borrowers who have not intentionally defaulted on their mortgages and do not have a debt-to-income ratio of more than 31 percent. It allows these homeowners to covert to a 30-year fixed mortgage, waive all pre-payment penalties and extinguish all second liens. Under this program, leaders will agree to forgive a portion of the mortgage.

Affordable Housing Trust Fund: This bill creates an affordable housing fund to support low and moderate income single-family and multi-family housing. For too long, the nation’s affordable housing stock has deteriorated, along with less funding to support affordable housing. This new fund, which takes a fraction (4.2 basis points) of each new business transaction, could generate as much as $500 million each year to build and maintain new, low to moderate income housing. For the first few years, this fund will help offset costs associated with the FHA refinancing provisions of the bill.

Afterward, 65 percent of the fund will be distributed to the states as a block grant and 35 percent will go to the Community Development Financial Institutions Fund to create a capital magnet fund to leverage more money.

Sen. Carper also co-authored with Sen. Bob Menendez (D-N.J.) an amendment, which is included in the bill that would allow states to use administrative funds from the Affordable Housing Trust Fund to improve financial education programs for homebuyers. Currently, 10 percent of the block grants can be used for administrative expenses, and this amendment will allow states to also use that 10 percent in funds to support financial literacy programs. These programs will help Americans better understand their credit history, develop budgets and start to build savings before they buy homes.

“Many Americans were taken advantage of by unscrupulous lenders, leading to the subprime mortgage crisis we have today,” said Sen. Carper. “This bill will help finance more financial literary programs so more Americans are better prepared to purchase and maintain a home.”

Foreclosure Prevention Act: This provision provides assistance for communities devastated by foreclosures, foreclosure counseling for families in need, programs to help returning soldiers avoid foreclosure, FHA modernization and mortgage disclosure enhancements. 

Sen. Carper was a vocal advocate to modernize and expand the FHA to ensure more families can benefit from safe, fixed-rate mortgages. The FHA modernization component of this legislation, which overwhelmingly passed the Senate on its own two months ago, will increase the FHA loan limit from $360,000 to $625,000, require a low down payment of only 3.5 percent, provide mortgage counseling and streamline the FHA bureaucracy. 


“Homeowners in Delaware and nationwide will have greater access to low-cost, government-based mortgages by making FHA again a primary mortgage source for working Americans, minorities and first-time homebuyers seeking the American dream of homeownership,” Sen. Carper said. “This measure will revitalize FHA so that low-income homebuyers have a safe, government-backed alternative to risky subprime predatory loans that have failed them.”

Housing Assistance Tax Act of 2008: This bill provides tax benefits for homeowners, homebuyers and homebuilders to help the housing market recover. It will increases low-income housing tax credits by 10 percent, establish a first-time homebuyer tax credit of up to $7,500, and provide an additional $10 million in mortgage revenue bonds to give states more funds to help homeowners refinance out of their subprime mortgages.

S.A.F.E. Mortgage Licensing Act: This bill creates a federal registry and establishes minimum national standards for all residential mortgage brokers and lenders, and Sen. Carper was a co-sponsor of this legislation, as well.