In opening remarks at a House Financial Services Committee hearing today with Secretary of Housing and Urban Development Julián Castro, Ranking Member Maxine Waters (D-CA) criticized Republicans for “hijacking a very important topic in order to launch attacks on the Secretary, and the Department, rather than substantively examine the issues impacting working people in this country.”
Waters highlighted the need for changes to the HUD’s Distressed Asset Stabilization Program so that it can better serve borrowers and noted that HUD “has proposed some modest changes to help ensure that individuals are better protected when their loans are sold, and to help level the playing field when community-based organizations want to place bids.”
Waters’ denounced Republican attempts to thwart improvements to the program to protect the interests of large corporations: “This is our last week in session, and we are rushing to hold hearings on how to maximize Wall Street profits at the expense of struggling homeowners,” she said, noting that the committee has not yet held a hearing on urgent issues such as homelessness.
Full text of the statement, as prepared for delivery, is below:
Thank you, Mr. Chairman, and thank you, Secretary Castro, for joining us today despite being called here by the Majority on such short notice and in such an unprecedented, discourteous way. With this hearing, Committee Republicans are hijacking a very important topic in order to launch attacks on the Secretary, and the Department, rather than substantively examine the issues impacting working people in this country.
Through the Distressed Asset Stabilization Program, or DASP, the Federal Housing Administration sells the mortgages of underwater borrowers to private enterprises and non-profits as a way to both help low income borrowers struggling to pay their mortgage and minimize losses to the Mutual Mortgage Insurance Fund.
Now, 98 percent of the loans sold so far have been auctioned off to firms like private equity funds. The rest have been sold to qualifying non-profits with substantial experience in community development.
The Administration, recognizing that this situation may not represent the best solution for borrowers, has proposed some modest changes to help ensure that individuals are better protected when their loans are sold, and to help level the playing field when community-based organizations want to place bids.
Apparently, my Republican colleagues don’t like it when the Administration looks to support consumers. In fact, it seems as if the Republicans would like the FHA to act like the same private mortgage companies that cratered the economy, and focus exclusively on the bottom line. But we know that that is not how DASP or the FHA was designed. The FHA has an obligation to the borrowers it serves, and that includes helping them stay in their homes.
Non-profit organizations are often best positioned to help borrowers do just that, but so far, they have been kept on the sidelines of the DASP program. Instead, loans have consistently been sold to Big Business, even when news reports have indicated that they’re doing a poor job of providing loan modifications to borrowers.
Further, the majority of loans sold through DASP are attached to properties in communities particularly hard hit by the housing crisis or that are home to racial and ethnic groups that have lost a disproportionate share of wealth throughout the foreclosure crisis. So we must be mindful of neighborhood stabilization because the outcomes for these loans could make a significant difference in the pace of recovery for these vulnerable communities. That is why many stakeholders and Members of Congress, including several here on this Committee, have been requesting changes to DASP that would increase non-profit participation and help protect borrowers.
I would like to point out that we do not yet know the full scope of the changes proposed by HUD since we all only have a preview of the changes to come in the next sale of loans, but from what we do know, the changes planned are sensible and incremental. So at best, this hearing is premature. And at worst, it’s an attempt by Republicans to score political points for attacking the Obama Administration while protecting the interests of the “one percent.”
I’d also like to point out the urgency with which the Majority responded to the possibility that private investors might lose out on a small share of loans. This is our last week in session, and we are rushing to hold hearings on how to maximize Wall Street profits at the expense of struggling homeowners. Is this your poverty agenda, Mr. Chairman? Because we have not held a single hearing this Congress on issues that actually warrant our urgent attention, such as the crisis of homelessness, or communities that are still struggling to recover from the Great Recession, or on discrimination occurring at private banks.
What’s more, Republicans continue to burden agencies with never-ending document requests and abusing their unilateral, self-granted subpoena power. Make no mistake, this is not only an effort to impair HUD and other agencies from doing their jobs, but also to distract the American public from the real policy issues these agencies are working to address each day.