Jim Leach

Mr. LEACH

Mr. LEACH. Mr. Chairman, I move to strike the requisite number of words. I think it only fair that we lay on the record what is the circumstance in the fairest possible way. The gentleman from Massachusetts may well be right that originally a legislator may have come up with this idea. But the gentleman from Massachusetts, I think, will acknowledge that the bill that was transferred from the Department of Housing and Urban Development under Secretary Cuomo, that was introduced by the gentleman from New York, [Mr. Lazio], and by the gentleman from Massachusetts, [Mr. Kennedy], contained a community service component of 8 hours of work per month. And I would ask the gentleman, is it not true that, basically speaking, in the nomenclature and the vocabulary of the House of Representatives, when an executive branch agency or department presents a bill to the U.S. Congress, it is normally considered to be the administration position?

Mr. LEACH. This side has never made a statement this is a perfect bill. We are dealing with each issue on its merits. But I would stress to the gentleman, in terms of partisanship, the provision that we are defending came to us, largely speaking, from the administration and we supported it.

Mr. LEACH. Mr. Chairman, will the gentleman yield?

Mr. LEACH. First, I hope the gentleman recognizes that this side has a lot of respect for the perspective being put forth.

Mr. LEACH. Mr. Chairman, will the gentleman yield?

Mr. LEACH

Mr. LEACH. Mr. Chairman, I would just like to make 3 quick points to clarify the Record. One, no one for reasons of poverty alone will be eliminated from public housing, only for violations of terms of the lease, such as criminal behavior. Second, the money in this bill is precisely the same as the administration requested. Third, we have to be very careful about this, but experience has shown, verified by experts as well as public consensus, that to concentrate the very poor alone in public housing is to condemn them to a kind of poverty segregation. Single dimension, lowest income housing simply has not worked anywhere in America, particularly high-rise housing. Finally, I would say that to object to reform is to endorse the status quo. This of all Federal programs is one in which there is virtual consensus that the failure rate has been very high.

Mr. LEACH. Mr. Chairman, I yield the balance of my time to the gentleman from New York [Mr. Lazio], and I ask unanimous consent that he be allowed to control the time.

Mr. LEACH. Mr. Chairman, I yield myself such time as I may consume. I rise today in support of H.R. 2, the Housing Opportunity and Responsibility Act of 1997. I want to thank the gentleman from New York [Mr. Lazio] for his extraordinary leadership on this bill as well as the constructive commentary of the gentleman from Massachusetts [Mr. Kennedy], who is the ranking member on the subcommittee, as well as the distinguished ranking member of the full committee, the gentleman from Texas [Mr. Gonzalez]. H.R. 2 is the product of numerous hearings that were held by the Committee on Banking and Financial Services as well as 4 days of markup which included more than 70 amendments, with some 20 amendments from the minority side adopted. H.R. 2 was reported by the committee by a vote of 28 to 19. In the last Congress, a similar bill, H.R. 2406, was reported out of the committee and passed the full House by a bipartisan vote of 315 to 107. Reforming our Nation's public housing programs, regardless of one's philosophical beliefs, is a priority both for the Congress and the administration. The committee was encouraged when Secretary Cuomo appeared before the Subcommittee on Housing and Community Opportunity on March 6 and stated that he will work night and day to enact historic public housing reform legislation. Likewise, the committee has been committed to working with Secretary Cuomo to reform rather than eviscerate HUD and the programs under its jurisdiction. Members may recall that 2\1/2\ years ago many in the administration and some in this body favored elimination of HUD. The Committee on Banking and Financial Services prefers to maintain a credible public housing commitment, recognizing that moneys are short and that disappointments in some areas may be significant. Nevertheless, we believe that reform and rehabilitation are preferable to stultification and decay. Virtually all interested parties agree that the current public housing system does not serve the tenants of public housing well, nor does it efficiently or effectively utilize taxpayer dollars that are appropriated for public housing programs. Quite simply, H.R. 2 is as much about improving the lives of low- income families and individuals as it is about fiscal responsibility and Government accountability. H.R. 2 replaces outdated laws and programs with a new empowering approach for communities designed to be relevant to the 21st century. Along with welfare reform efforts, this bill is a critical step on the path to revitalizing empowerment programs that were crafted decades ago in a different social, legal, and economic environment. Without question, there are a number of important issues where the majority and minority part ways on philosophical grounds. These issues were debated and considered in an open forum at the Committee on Banking and Financial Services, and I am pleased that the rule for this bill provides for the same opportunity in the full House. While I do not wish to review all the issues where there are disagreements at this time, I would like to briefly touch upon one issue where there appears to be an inconsistency within the ranks on the congressional minority and the Democratic administration. H.R. 2 provides that each adult member of a family residing in a public or assisted housing project contribute not less than 8 hours per month in community service activities. Individuals who would be exempt from this requirement include the disabled, the elderly, persons who are employed and others who are otherwise physically impaired from performing such services. Also, the provision is structured so as not to duplicate community work requirements under local welfare reform efforts. This provision is generally based upon the long held American precept that those who receive assistance from a community should give back to that community in some way. Some of our Democratic colleagues argue that this provision is punitive and demeaning. Yet it is worth noting that the administration's public housing bill that was provided by Secretary Cuomo and introduced by the gentleman from New York [Mr. Lazio] and the gentleman from Massachusetts [Mr. Kennedy] by request included the same provision to require 8 hours of community service. Also, the public housing bill that passed the House in the last Congress by a resounding 315 to 107 vote, which was submitted by former HUD Secretary Henry Cisneros, included the same community service requirements to which our colleagues on the other side are now raising objections. It is true there could be a slight administrative cost increase in this work component, but it would be our hope that this cost could in part be borne by those asked to fulfill a work commitment. In the larger picture, the bill is deregulation oriented with the CBO estimating administrative savings of $100 million over 5 years. As for funding, this bill matches the administration request for fiscal year 1998 and is consistent with the fiscal year 1997 enacted levels. In other words, our approach represents a freeze on spending with greater administrative discretion allowed at the housing authority level. Given efforts to balance the budget, this bill represents an administration congressional consensus. The minority is correct that the bill moves to more mixed income housing with housing authorities, at their strong request, allowed to provide housing to the near poor as well as the poor. While all poor currently in housing are legislatively protected, it must be understood that there are many aspects of current public housing programs which have been judged by experts as well as the public as a failure. To concentrate the very poor alone in public housing, particularly high-rise housing, is to condemn them in many instances to poverty segregation. Single dimension, lowest income housing simply has not worked. For the sake of decent standards of housing for the poor, more local discretion is needed. Mr. Chairman, I urge consideration of this reform approach as common sense. Mr. Chairman, I reserve the balance of my time.

Mr. LEACH

Mr. LEACH. Mr. Speaker, I ask unanimous consent that the Committee on Banking and Financial Services may file a supplemental report, Part II, to the bill (H.R. 2) to repeal the United States Housing Act of 1937, deregulate the public housing program and the program for rental housing assistance for low-income families, and increase community control over such programs, and for other purposes, Report No. 105-76.

Mr. LEACH

Mr. LEACH. Mr. Speaker, will the gentleman yield?

Mr. LEACH. Mr. Speaker, I yield back the balance of my time.

Mr. LEACH. Mr. Speaker, I yield 30 seconds to the gentleman from Massachusetts [Mr. Kennedy].

Mr. LEACH. Mr. Speaker, on that I demand the yeas and nays.

Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Washington [Mr. Metcalf]. (Mr. METCALF asked and was given permission to revise and extend his remarks.)

Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume. In conclusion, I would like to thank again the gentleman from Utah [Mr. Hansen] for his thoughtfulness and dedication to this issue; the gentlewoman from New Jersey [Mrs. Roukema], whose subcommittee had thoughtful jurisdiction; the minority for their substantive participation, particularly the gentleman from Texas [Mr. Gonzalez], the gentleman from Massachusetts [Mr. Kennedy], and the gentlewoman from California [Ms. Waters], who passed a very significant amendment. In the final measure, this bill is pro-consumer, pro-homeowner, pro States' rights, and above anything else, it underscores decency and fairness under the law. Finally, I would also like to say that it is symbolic of a Congress able to work together in trying political times for the public interest.

Mr. LEACH. Mr. Speaker, I yield 4 minutes to the distinguished gentleman from Texas [Mr. Paul]. (Mr. PAUL asked and was given permission to revise and extend his remarks.)

Mr. LEACH. If I could respond briefly to the gentleman, I share his concerns. I would tell him, though, as we move forward we do want to be very sensitive to possible new products, but we also have to take very great care to insure that poor people do not come under a different standard than others, and if we developed two different standards, we might put complications in the home lending market as well. So I am open to any of the concerns the gentleman may have, but I am unprepared to make firm commitments. Mr. Speaker, I yield 2 minutes to the distinguished gentlewoman from New Jersey [Mrs. Roukema]. (Mrs. ROUKEMA asked and was given permission to revise and extend her remarks.)

Mr. LEACH. I would tell the gentleman, this is a very legitimate concern. I too want to benefit the homeowner and not the class-action lawyer. Because of some of the industry practices concerning PMI, such as not providing borrowers sufficient information on how to terminate the insurance or requiring PMI long after it is needed, mortgage servicers and insurers are facing more and more lawsuits. This legislation will clarify what the responsibilities of market participants are concerning PMI. Without this legislation, in States which do not have State PMI laws, it will be the courts who will determine by judicial fiat the legal liability of the mortgage industry participants on an ad hoc basis. This bill provides more certainty to the law concerning a borrower's rights and PMI and thus is intended to make litigation less likely. Mortgage market players have expressed some concern that the provision of the bill requiring the conditions for terminating PMI be reasonably related to the requirements for private mortgage insurance may precipitate unnecessary litigation. This is not the intent of the committee. It is the expectation of the committee that HUD, which has rule making authority, would put forth commonsense interpretations of this provision designed to preclude unreasonable lawsuits.

Mr. LEACH. This concern is also a valid one, but certain issues should be kept in perspective. Generally, mortgage servicers and lenders already have to make a number of disclosures to homeowners at settlement and during the life of the mortgage under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The intent of the committee in drafting this legislation was to ensure that most of the notices concerning PMI are made in conjunction with the notice requirements of these acts. In addition, I think it should be noted that the biggest and most reputable mortgage servicers in the country, including one headquartered in my State, are beginning to provide borrowers notices on PMI. Finally, a number of States already require or are considering requiring notices on PMI. For instance, the States of California and New York, which comprise 20 percent of the home mortgage market, require disclosure to borrowers on this kind of insurance. This law would provide a disclosure standard for the entire country, which may make other State legislatures less likely to impose new State standards on this subject.

Mr. LEACH. Mr. Speaker, I will tell the gentleman, this is an extremely important inquiry. The intent of the legislation is to cover individual private primary mortgage insurance covering individual loans and not insurance for an entire pool of mortgages. The reason it is important that pool insurance not be covered is that it allows mortgages with PMI to be intermingled in the secondary market with those without, thus providing more flexibility in their securitization and lower cost for the homeowner.

Mr. LEACH. Mr. Speaker, will the gentleman yield?

Mr. LEACH. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina [Mr. Burr].

Mr. LEACH. Mr. Speaker, before the House today is H.R. 607, the Homeowners Insurance Protection Act of 1997, introduced by the distinguished gentleman from Utah [Mr. Hansen]. Mr. Speaker, before presenting a committee perspective, I yield such time as he may consume to the gentleman from Utah [Mr. Hansen], who deserves full credit for bringing this legislation to the attention of the House and also the thanks of thousands, perhaps millions, of American homeowners. It is not only fair but 100 percent accurate to say that without his leadership, this bill would not be before the House today. (Mr. HANSEN asked and was given permission to revise and extend his remarks.)

Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume. (Mr. LEACH asked and was given permission to revise and extend his remarks.)

Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume. As has been noted, this legislation provides for automatic cancellation of private mortgage insurance once homeowners' equity reaches 75 percent of the original value of the house, and as long as the homeowner is current in making mortgage payments. In addition, it extends important new consumer disclosure provisions to this little understood type of insurance which protects the mortgage holder, but is paid by the homeowner. The bill is thus designed to strike a balance which protects the homeowner and at the same time provides an incentive for lenders to make loans at competitive rates in circumstances where otherwise credibly priced loans would not be available. This insurance product has been around for a number of years and typically costs affected homeowners between $300 and $900 annually. But until the gentleman from Utah [Mr. Hansen] raised the issue of whether coverage was necessary after homeowners' equity reached a certain level, it has not been the subject of congressional action. Since coming to the attention of the Committee on House Banking and Financial Services earlier this year, H.R. 607 has been on a fast track. The committee held a public hearing on March 18 and approved H.R. 607 on a vote of 36 to 1 just 2 days later, on the eve of our departure for the spring recess. Frankly, it had been my original intention to mark up the legislation in committee on the day of the hearing, but we postponed committee consideration at the request of the minority. Subsequent to the committee's action, I asked the leadership to schedule this bill for a vote by the full House in the first or second week after the recess. Here we are today, on schedule, with a bill that has been brought to the floor, unmodified from the committee product. In my judgment, the committee has crafted in a bipartisan fashion an approach which deserves the support of this House. Homeowners should not be stuck with paying insurance to protect others on a home that becomes protected by its own collateral value. If insurance fees continue past the point where 25 percent of the value of the loan has been paid, one group of homeowners; that is, those who originally may not be able to make a large down payment, will be prejudiced against in relation to those able to afford a larger down payment. This bill is thus, above anything else, about common sense equity. I urge its adoption. Mr. Speaker, I reserve the balance of my time.