of an act of rape or incest mrs. hutchison: i assume you do know what is in that bill. what about the federal employees health benefit plan? what does it say? mrs. hutchison: the reason i mentioned senator kennedy is because he was the leading liberal in the senate at the time and yet he agreed to that language. the federal employee health benefit package, the following language appears in the financial services and general government appropriations act for fiscal year 2009: section 613. no funds appropriated by this act shall be available to pay for an abortion or the administrative expenses in connection with any health plan under the federal employees health benefits program which provides any benefits or coverage for abortions. section 614. the provisions of section 613 shall not apply where the life of the mother would be endangered if the fetus were carried to term or the pregnancy is the result of an act of rape or incest.

mrs. hutchison: isn't that the same as the language of the nelson-hatch-casey amendment? mr. hatch: you're right. let me read that language for you. in general, no funds authorized or appropriated by this act or an amendment made by this act may be used to pay for any abortion or to cover any part of the cost of any health plan that includes coverage of abortion. mrs. hutchison: based on what you've said, this is not new federal abortion policy? the hyde amendment currently applies to the plans discussed, including the plans that members of congress have, and the abortion protections for all of the federal health programs all say exactly the same thing and that we should -- the amendment that we are going to vote on, that is the nelson-hatch-casey amendment, would preserve the

three-decades long precedent. that's what your amendment does. and that we must pass it if we are going to guarantee that the bill that is on the floor is properly amended so that it is the same as our 30 years of abortion federal policy in this country? mr. hatch: the reason it's so critical that we pass the nelson-hatch-casey amendment is that it is the only way to guarantee that taxpayer dollars are not used by the insurance plans under the democrats' bill to pay for abortions. in other words, the hyde language is in the appropriations process. we have to do it every year rather than making it a solid amendment. but this bill is not subject to appropriations. so this bill, if we leave the hyde language out of this bill and the language that we have in the amendment, the

nelson-hatch-casey amendment, then we would be opening up a door for people who believe that abortion ought to be paid for by the federal government to do so. and we should close that door because that's been the rule since 1977. mrs. hutchison: i just thank you for the explanation. i thank the senator from utah, because i do think it's important that people know. there has been a lot of question raised about the bill and whether it would be a foot in the door for a -- for changing a policy that really has been the law of our country and accepted as such, whether it was a democratically controlled congress or republican-controlled congress. i think everyone has agreed that this hyde amendment language has protected federal taxpayers who might have a very firm conviction against abortion would not have to be subsidizing

this procedure. mr. hatch: i appreciate the distinguished senator from texas pointing this out. the current bill has language that looks like it is protected but it is not. and that's what we're trying to do, is close the loophole in that language and get it so that we live up to the hyde amendment which has been in law since 1977. and to be honest with you, i don't see how anybody could argue that the taxpayers ought to be called upon to foot the bill for abortions. let's just be brutally frank about it. the taxpayers should not be called upon to pay for abortions. the polls range from 61% of the american people, including many pro-choice people, do not believe taxpayers should pay for abortion to 68%. the polls are from 61% to 68% do not believe that the taxpayers ought to be paying for abortions except to save the life of the mother or for rape or incest.

and we provided for that -- for those approaches in this amendment. so anybody who argues otherwise is just plain not being accurate. mr. specter: madam president, would the senator from utah be willing to yield for a question? mr. hatch: sure. mr. specter: my question relates to the provisions of the pending bill, section 1303-2-b which specifies that the plan will not allow for any payments of abortion and where there is as provided out of section 1303-2-a, there would be a segregation of funds. so that under the existing

statute, there is no federal funding used for abortion. but an individual may bile additional funds -- may buy additional funds, a woman having the right to pay for her own abortion coverage. and with the status of medicaid, where the prohibition applies to anybody, any federal funds being used to pay for an abortion, there are 23 states which allow for payment for abortion coverage coming out of state funds. so aren't the provisions of this statute which enable the woman to pay for abortion on her own exactly the same as what is now covered under medicaid without running against the violation

provisions of the hyde amendment? mr. hatch: the way we view the current language in the bill is that there's a loophole there whereby they can even use federal funds to provide for abortion in this, under this segregation language. and that's what we're concerned about. want to close that loophole and make sure the federal funds are not used for abortion. like i say, there are millions of people who are pro-choice who agree with the hyde language. all we're doing is putting the hyde language into this bill in a way that we think it will work better. mr. specter: if the senator -- a senator: would the senator yield for a comment? mr. brownback: i'd like to quote bart stupak who carried this amendment, the same sort of amendment you're putting forward only on the house side and the same sort of questions naturally were coming up, saying you're blocking abortion funding of the

individual. and i'm quote ron goldman from representative stupak, the cap amendment departed from hyde in several important and troubling ways, by mandating that at least one plan in the health insurance exchange provide abortion coverage. by requiring a minute number $1 monthly charge for all covered individuals that would go toward paying for abortions by allowing individuals receiving federal affordability credits, those are federal dollars, to purchase health insurance plans that cover abortion. in all those ways, the cap amendment, which is in the reid bill, expands and does federal funding of abortion that we haven't done for 33 years. going on with stupak, hyde currently prohibits direct federal funding of abortion much the stupak amendment, which is also the nelson-hatch amendment, is a continuation of this policy of the hyde amendment. nothing more. nothing less.

and i think it's important that we clarify that this is a continuation of what we've been doing for 33 years that the senator from utah, the senator from nebraska is putting forward in this amendment. and i thank my colleague for yielding for that. mr. hatch: i thank my colleague for bringing that forward. the segregation language in here is a very problematic language, and that's what we're trying to resolve. we basically all agreed with the hyde language since 1977, this would, in effect, incorporate the hyde language for the bill. a senator: would the senator yield for a comment? mr. hatch: sure. mr. johanns: if i might just have a thought on this language. the national right to life group saw through that language immediately. it took them about 20 seconds to figure out what was happening here and i think they referred to it as a bookkeeping gimmick

that there would be segregation if the federal money went in the left pocket but you paid for abortions out of your right pocket. and it doesn't make any sense. that segregation isn't going to work. they saw through it. they saw the gimmick it was. let me just say i support your amendment. i applaud you and senator nelson and senator casey for bringing this very important issue forward. i applaud you for keeping this effort that started with the hyde amendment or hyde language, rather. because what we're doing here is saying clearly to the american people, whether directly or indirectly, your tax dollars are not going to be used to buy abortions. and thank you for your leadership on this issue. i'm happy to be here to support that. a senator: would the senator from utah respond to my question? mr. specter: how can you disagree with the provisions of

section 1303, 2a, the bill which is pending which specifies that if a qualified health plan provides for services for abortion -- this is the essence of it -- if a qualified health plan qualifies for services for abortion, the issue of the plan shall not use any amount of the federal funds for abortion. so there is a flatout prohibition for use of federal funds. and under section 1303, 2b, there is a segregation of funds which is identical to medicaid. so however you may want to characterize it, the -- how do you respond to the flat language of the statute which accomplishes the purpose of the hyde amendment and allows -- allows for payment by collateral funds just as medicaid pays for abortions without federal funds. mr. hatch: i'm not going to ask

it in the form of a question. if that's true, then why have the cap language in there? why don't we take the hyde language, which is what we're trying to do. is didn't true. we know under this bill there would be subsidization to help people pay for it. it could go up to $88,000 a year. and that could be indirectly used for abortion. it is a loophole that hyde closes. and if -- if -- if the distinguished senator from pennsylvania believes that the cap language does what hyde meant to begin with and what it's been since 1977, what's wrong with putting the hyde language in here? what's the problem we see it as literally a loophole through which they can actually get help from the federal government directly and indirectly to pay for abortion. now, let's think about it. there are no mandates in this

language that we have for elective abortion coverage. plans and providers are free from any government mandate for abortion. there's no federal funding of elective abortion or plans that include elective abortion, except in the case where the life of the mother is in danger or the pregnancy is caused by rape or incest. the amendment allows individuals to purchase a supplemental policy where a plan that covers elective abortion as long as it is purchased with private dollars. the amendment prohibits the public plan from covering elective abortions, it prevents the federal government from mandating elective abortion by providers within such plans and are not prevented from selling truly private abortion coverage. even through the exchange. this amendment doesn't prohibit that. bottom line, the effect on

abortion funding and mandates is exactly that of the house bill changed by the stupak amendment. look, if -- if the distinguished senator from pennsylvania believes that -- that the cap language is the same as hyde, he's wrong. and if he believes that it does what hyde would do, he's wrong. and why not just put the hyde language in once and for, which has been there since 1977, that's what the stupak language is. the hyde amendment specifically removes abortion from government programs. but the reid bill specifically allows abortion to be offered in two huge new government programs. the reid bill tries to explain this contradiction by calling for the segregation of federal dollars when federal subsidies are used to purchase health plans. this -- quote -- "segregation" of funds actually violates the

hyde amendment which prevents funding of abortion by federal funds and state matching funds within the state plan. simply put today federal and state medicaid dollars are not s%aá%b@ b for example, the medicaid program receives both federal and state dollars. there is no segregation of either the federal medicaid dollars or state medicaid dollars. with that, i know i have some colleagues who asked to have time to speak. i will yield the floor.

mr. vitter: will the senator yield? madam president? mr. specter: the senator from utah has not yet answered the question. the presiding officer: the senator from louisiana. mr. vitter: i strongly support the senator from utah's amendment and along with senator nelson and senator casey. i think that this exchange and colloquy is very helpful. in fact, i think it proves the point and the senator from pennsylvania's participation in it. the only folks defending the language in the reid bill are folks who are strongly and clearly pro-choice an proabortion. -- and proabortion. folks who have a problem with that say that the underlying language in the reid bill has huge loopholes. and that includes the people who want to support the bill otherwise. as senator brownback mentioned, representative stupak wants to support the underlying bill,

supported it in the house, but he was very clear in his efforts on the house floor that that underlanguage, which is now in the reid bill, had huge loopholes, wasn't good enough. needed to be fixed. that's why he came up with the stupak language, and that's essentially exactly what we have in this amendment. similarly the u.s. conference of bishops. they're very supportive of the concepts of the underlying bill. it said clearly that the reid bill is cleell completely unacc, close quote, on this abortion. and -- quote -- "-- so this colloquy involving the distinguished senator from pennsylvania, that general debate, i think, proves the point clearly. and i, again, compliment the

senator from utah, along with senator nelson, senator casey, others. i'm a cosponsor of the amendment. we need to pass this on the bill. this will do away with the loophole. this will be real language to truly prohibit taxpayer funding of abortions. this constitutes exactly the same as that long tradition since 1977 of the hatch amendment. this mirrors the stupak language. so it should be crystal clear. what will this amendment specifically do? it will mean that there are no mandates for elective abortion coverage. plans an providers are free from -- and providers are free from any government mandate of abortion under this amendment language. it would mean that there is no federal funding of elective abortion or plans that include elective abortion, except in the cases when the life of the mother is in danger or in cases

of rape or incest. this means that this amendment would allow individuals to purchase a supplemental policy or a plan that covers elective abortion as long as that separate policy is purchased completely with private dollars. it would prohibit the public plan from covering those elective abortions an prevent the federal government from mandating abortion coverage by any private plan. insurance plans are not prevented from selling truly private abortion coverage, including through the exchange, but taxpayer dollars would have nothing absolutely -- absolutely nothing to do with it. bottom line, the effect on abortion funding and mandates is exactly the same as the long distinguished tradition of the hyde amendment with this amendment and it would be exactly the same as the stupak language on the house side. now, i also agree with the distinguished senator from utah when he said this should not be

of any great controversy. abortion is a deeply divisive issue in this country. but taxpayer dollars being used to pay for abortion is not. there is a broad and a wide and a deep consensus against using any taxpayer dollars to pay for abortion. the senator from utah mentioned polls. that's why the hyde amendment has been longstanding since 1977. that's why it's been voted and supported and passed again and again and again. in congressing with democratic majorities and republican majorities. it is a solid consensus. it does represent the commonsense of the american people. -- common sense of the american people. i will follow in a similar proud tradition of louisiana senators supporting that consensus. every u.s. senator from

louisiana since the hyde amendment was originally adopted has strongly supported this commonsense consensus view. every senator. an everyone, but me, has been democrat. every sitting senator from louisiana has supported that commonsense consensus view, and i surely hope that tradition, as well, continues today. again, i applaud the senator from utah and his leading cosponsor, senator nelson, senator casey on this effort and i encourage all of my colleagues, democrats and republicans, to come together around what the american people consider a real no brainer. a new consensus. something that clearly reflects the common sense of the american people. is abortion a divisive issue? yes. is using taxpayers to fund abortion a close question?

no. there is a clear consensus in america not to use any taxpayers' dollars to fund abortion. it's crystal clear to continue that. we need to pass this amendment and the underlying language in the reid bill is completely unacceptable. with that, i thank you, madam president. i yield the floor. mr. hatch: madam president, i'm appreciative of the distinguished senator from texas, the distinguished senator from louisiana and the distinguished senator from nebraska and, of course, the distinguished senators from kansas and -- and montana -- not montana but south dakota, who are here on the floor and participating in this. i believe we have until 12:27. so i'm going to relistening wish the floor and leave it up -- relinquish the floor and leave it up to you. a senator: i want to put a fine point on something that was said by the senator from pennsylvania about the use of medicaid funds in the states.

there are a number of states that do provide programs that have abortion funding, but i think there is a very clear distinction that needs to be made in medicaid funds which are matching funds, and none of those funds can be used to fund abortions. and you said that in response to his question, but i think that point needs to be made very clear because the senator from pennsylvania was implying that somehow since states had created programs that fund abortions and since medicaid is a federal-state program, that somehow those two are being mixed and that this idea that because we're -- they're calling for -- quote -- segregation, that really doesn't exist in the medicaid program. the medicaid program, those are matching funds. that is a federal-state program, and the federal dollars that go into the medicaid program, the prohibition that exists on federal funding of abortions applies to medicaid dollars that go to the states. to the degree that states have adopted programs that fund abortions, those are state funds and not medicaid funds which are

matching funds. mr. hatch: i'm glad the distinguished senator made that even more clear. last night, a number of democrats got on the floor and i think completely distorted this issue. look, if they -- if they think that the caps language equals the hyde language, why not put the hyde language in? they don't want it in because they want to be able to fund abortion any way they possibly can. and they will not only be able to fund it in a variety of ways with federal dollars if we don't put the -- the hyde language in. so that's what this is about. i would be happy to yield the floor. a senator: i have another point on this as well f you're not clear about this, then abortion will also be funded. mr. brownback: if there is any sort of this let's kind of be fuzzy about this and not be clear, the commonwealth of massachusetts recently passed its state-mandated insurance, commonwealth care without an

explicit exclusion on abortion, and guess what? abortions there were also funded immediately. in fact, according to commonwealth care website, abortion is considered covered as an outpatient medical care. so that's the point about being clear with the hyde type language, which is the nelson-hatch language, is it specifically says no, we're not going to fund this, we're going to continue this 33-year policy. and if we do fund abortion, if we put the caps funding in that does fund abortions, last time the federal government funded abortions was the three-year period after roe but before hyde, annually we were funding about 300,000 abortions a year, federal taxpayer dollars funding of abortion through medicaid. i cannot believe that any of my colleagues would say yes, i would be willing to buy into that, 300,000, when president obama, president clinton before said we want to make abortion safe, legal, and rare. well, 300,000 a year wouldn't be in that ballpark, and that's the past number that happened when

you didn't have hyde language in place at the federal level. mr. hatch: it's just a big excuse. all this yelling and screaming when they say well, it equals the hyde language. it doesn't equal the hyde language. that's the problem. and if they -- if they want to solve the problem, why not use the hyde language that has been accepted by every congress since 1977. and you're right. 300,000 abortions between 1973- 1977 because we didn't have the hyde language, we got tired of it, tired of the taxpayers -- why should -- paying for it. why should taxpayers who are pro-life, for religious reasons or otherwise, have to pay for abortions, elective abortions by those who are not? they shouldn't have to. and to be honest with you, the language in the current bill is ambiguous, it would allow that, and anybody who is arguing that this is the same as the hyde language just hasn't read the

caps language. and we want to change it so that we go with hyde. it doesn't affect the right to an abortion at all except that we're not going to have taxpayers paying for it. mr. thune: to the senator's point if he would yield on that point. that's what the stupak and other members of the house of representatives saw, that this created tremendous ambiguity, and they sought to tighten it up and reinstate what has been long-standing policy with regard to federal funds and their use to finance abortions since 1977 and the hyde language. and so the stupak amendment to the house bill, as you recall, passed with 240 votes. there was a sizable decisive majority of members in the house of representatives who saw through what the -- the am ambiguity that exists with regard to the house bill and now the senate bill. but this is intentionally ambiguous for the reason you just mentioned. all this simply does is clarify once and for all what has been

standard policy here at the federal level going back to 1977. and as was stated earlier, i believe represents the consensus view in america, both republicans and democrats i think believe that this is ground that we all can stand on, irrespective of where people come down on this issue, that the idea that somehow federal funds ought to -- taxpayer funds ought to finance abortions is something that most americans disagree with, and that's why i think there has been such broad bipartisan support going back to 177 for this particular policy and why it should be extended into the future. and as you said, the senator from utah said 61%. i've seen polls that suggest it's much higher than that. it certainly would be much higher than that in my state of south dakota. but i commend the senator for seeing his way to offer an amendment that clarifies and removes all this ambiguity and what to me is clearly intentional ambiguity with regard to this issue and the underlying bill.

mr. hatch: i ask unanimous consent that senator cornyn be added as a cosponsor of the nelson-hatch-casey amendment. a senator: how much time is left on our side? the presiding officer: four minutes, 48 seconds. mr. johanns: i have been on the floor a number of times now debating this issue a while back on the motion to proceed and since this amendment has come out. the senator from utah, i don't believe i have seen a more concise, clear explanation of the history of the hyde language than i just saw over the last half an hour of debate here on the senate floor. you laid it out perfectly. you laid out how we have over a long period of time stayed with that hyde language. that was the agreement that had

been reached. now, our colleague from texas said this is a foot in the door, and i agree with her. if this reid bill passes with the current language on abortion, it's not only a foot in the door, in my estimation it kicks down the door. it kicks down the door and sets up structure for funding, federal funding of abortions, and that's what we're going to end up with. now, a couple of weeks ago, i came to the floor when we were debating the motion to proceed and i said at that time -- i said, you know, to me, this is the pro-life vote, because if this bill goes to the floor, we now need 60 votes to get an amendment passed. i said i don't count the 60. i kind of issued a challenge. i said gosh, if there is any member who does have a list of 60 members who will vote for this amendment, i'm willing to take a look at that and change my view of the world.

well, that hasn't happened. in fact, there are many predictions being made that sadly and unfortunately this amendment won't get the 60 votes needed. well, let me put this in context. for pro-life senators, this is the vote, but it doesn't stop here. in my estimation, you're pro-life on every vote. you don't get a pass on this vote or that vote or the next vote or whatever the vote is. you're pro-life all the way through. and even if this amendment doesn't pass, i wanted to make the case that then this bill should not go forward because it literally will create a system, a structure, a way to finance abortions. and i don't believe that that's what this country wants. many senators -- the senator from south dakota, the senator from kansas have very, very clearly made the case. the people in the united states do not want their tax dollars to

go to buying abortions. and so my hope is that 60 will step up on this amendment. i'm sure going to support it. i'll speak everywhere i can in support of it. i just am so appreciative that senator nelson and senator hatch and senator casey brought this forward, and i'm glad to be a cosponsor. and it is my hope, it is my hope that this amendment will pass, but then it is my conviction that we need to stand strong throughout this debate and make sure that this language doesn't end up in the final bill. i yield the floor. the presiding officer: the senator from kansas. mr. brownback: i think the -- the catholic bitches put it probably as concisely as anybody. they put it in this term -- they said in every major program where federal funds combine with nonfederal funds to support or purchase health coverage, congress has consistently sought to ensure that the entire

package of benefits excludes elective abortions. that's what we've done. that's what we have done for 33 years until this moment. until the caps language that's the base in the reid bill, and now we would flip that on its head and we would say you can combine federal funds with nonfederal funds to pay for elective abortions. that was the policy prior to hyde in 1977. that funded then 300,000 abortions roughly a year at that point in time. there is no way in this country that that's the policy that the american people support. they don't. they would be divided about abortion. they are not divided about federal funding for elective abortions. no division about that at all. very consistent policy until we've seen the reid bill in this particular piece of legislation. and we have been quite consistent about that, so it would be my hope that my colleagues would say well, okay, i may be pro-choice but i have

consistently supported hyde because i think that's -- we shouldn't be funding elective abortions, and i would hope that they would vote for the nelson-hatch amendment because of that very feature on this. it isn't about abortion. it's about the funding. it's about the funding of elective abortions, t t t t the range of reproductive health care. why are women being singled out here? it's so unfair. we've had a fir firewall in plae for 30 years. it said this: no federal funds can be used for abortion, but private funds can be used as long as abortion is legal, and it is. roe v. wade made it legal in the early stages of a pregnancy. women have that right. what this amendment does is says, there's one group of women here we're going to treat differently. we're going to take 1 procedure that only applies to them and

say they can't buy health insurance for that toadure. only if it's a -- procedure. only if it's a separate rider, which everyone knows is unaffordable, impractical and will not work. i don't see any amendment here saying to men that if they want to have a procedure that relates to their reproductive health, they can't use their own private money to buy coverage for it. no, it's not in there. we don't tell men that if they want to make sure their can buy insurance coverage through their pharmaceutical plan for viagra that they can't do it. no, we don't do that and i wouldn't support that. it would be wrong. well, it's wrong to single out women and to say to women of this country, they can't use their own private funds to purchase insurance that covers

the whole range of reproductive health care. now you have to look behind at this amendment to really understand how pernicious it really is. because the whole point of it is, and i -- five male colleagues on the other side of the aisle were on the floor for, i don't know, at least an hour pawckintalking about this amend. and each and every one of them want to make abortion illegal. there's no question about it. they want to take away a woman's right to choose, even in the earliest stages of a pregnancy. even if it impacts her health, her ability to remain fertile, her ability to avoid a very serious health issue, such as, a heart problem or a stroke. they don't want to have an exception for women's health. no questions that what they

want. the presiding officer: the senator's 10 minutes is up. mrs. boxer: i ask unanimous consent for an additional 30 seconds and then i'll turn to senator lautenberg. the presiding officer: without objection. mrs. boxer: so to sum up my part here, the amendment offered by nelson, hatch, vitter,et al, brownback, it hurts women. it singles out one legal procedure and says, you know what? you can't use your own private funds to buy insurance, so in case you need to use it for that legal procedure, you can't. i will yield the floor and note that senator lautenberg is here for five minutes. i'm sorry, it was senator murray for five -- the presiding officer: the senator from washington. mrs. boxer: sorry. mrs. murray: thank you, madam

president. mr. president, and thank you, madam chairman, for your debate on this and for outlining the serious concerns we have. and i rise today not only in strong opposition to the nelson amendment, but in strong support of women's health care choices, which this amendment would eliminate. mr. president, we can't allow a bill that does so much for women and for families and our our businesses and for the future strength of this nation to get bogged down in idealogical politics. because in every single sense of the word, health insurance reform is about choices. giving options to those who don't have them, options for better care or better quality and insurance that is within reach. this bill was never supposed to be about taking away choices and we cannot allow it to become that. mr. president, this bill already does so much for millions of women across america.

already so far the senate has passed senator mikulski's amendment to make sure that all women have access to quality preventive health care services and that screenings that are so critical to keeping women's healthy -- women healthy are available. the bill -- this underlying bill will help women by ending discrimination based on gender rating or gender bias preexisting conditions on covering maternity care on covering preventive care and screenings including mammograms an baby care, expanding coverage, even if an employer doesn't cover it and cover those who are in an abusive relationship, if they leave, they and their children could lose their coverage. now, mr. president, the amendment before us today would undermine those efforts and goes against the spirit and the goal of this underlying bill. mr. president, all americans should be allowed to choose a plan that allows for coverage of

any legal health care service no matter their income. and that, by the way, includes women. but if this amendment were to pass, it would be the first time that federal law would restrict what individual private dollars can pay for in the private health insurance marketplace. if this amendment were to pass, it would be the first time that federal law would restrict what individual private dollars can pay for in the private health insurance marketplace. now, the opponents of this bill have taken to the floor day in and day out for months arguing that this bill takes away choice. mr. president, this bill doesn't take away choice, but, boy, this amendment sure does. this amendment stipulates that any health plan receiving any funds under this legislation cannot cover abortion care even if such coverage is paid for using the private premiums that health plans receive directly from individuals.

simply put, what this amendment does is if a health plan wants to offer coverage to individuals who receive affordability credits, no matter how small, that coverage cannot include abortion care. in this way, the amendment doesn't just restrict federal funds. it restricts private funds. and it doesn't just affect those receiving some amount of affordability credit. it also impacts people who are paying the entire cost of coverage but who just happen to purchase the same health plan as those with affordability credits. so the bottom line, mr. president, this amendment would be taking away options and choices for american women. mr. president, there's no question this amendment goes much farther than current law, no matter what our colleagues on the other side contend. current law restricts public funds from paying for abortion except in cases of rape or

incest or where the woman's life is in danger. the existing bill that is before us represents a genuine compromise. it prohibits federal funding of abortion, other than the exceptions i just mentioned, but it also allows women to pay for coverage with their own private funds. it maintains current law. it doesn't roll it back. but this amendment that is now before us would be an unprecedented restriction on women's health choices and coverage. health insurance reform should be a giant step forward for the health and economic stability of all americans. this amendment would be a giant step backwards for women's health and women's rights. you know, women already pay higher costs for health care. we shouldn't be forced into limited choices as well. so, mr. president, we're standing on the floor today having a debate about a broken health insurance system. it is broken for women who are denied coverage or charged more

for pre-existing conditions or pregnancy or c-sections -- mr. president, i ask for an additional 30 seconds. the presiding officer: without objection. mrs. murray: for people -- for women with domestic violence, c-sections that are classified as pre-existing conditions. it's broken when insurance companies charge women of child-bearing age more than men but don't cover maternity care or only offer it for hefty additional premiums. mr. president, the status quo is not working. women and their families need health insurance reform that gives them options, doesn't take them away, so i urge my colleagues stand up for real reform, reject this shortsighted amendment. thank you, mr. president. i yield the floor. the presiding officer: the senator from california. mrs. boxer: i wanted to amendment the unanimous consent request to give senator lautenberg eight minutes and myself two minutes followed by senator cardin for five. the presiding officer: without objection, so ordered. the senator from new jersey. mr. lautenberg: mr. president,

throughout my service in the senate, i have been a strong supporter for health care reform, but we can't allow reform to be used as an excuse to roll back women's rights they have had for almost a half a century. and that's why i strongly oppose the amendment offered by my friend, the senator from nebraska. i think he's wrong. what this amendment does is remove a woman's right to make her own decision as a practical matter. it's to prohibit any of the health plans on the exchange from covering abortion. and it will ban coverage even for women who don't get a dime in federal subsidies. women's reproductive rights are always being challenged here in

the congress, but what about men's reproductive rights? so, mr. president, let's turn the tables here for a moment. what if we were to vote on a viagra amendment, restricting coverage for male reproductive services. the same rules would apply for vargas being proposed for abortion, and of course that means that no health plan on the exchange would cover viagra availability. how popular would that demand be around here? mr. president, i understand that abortion and drugs like viagra present different issues, but there is a fundamental principle that is the same, restricting access to reproductive health services for one gender. and this amendment is exclusively directed at a woman's right to decide for

herself. it doesn't dare to challenge men's personal decisions. mr. president, i have the good fortune of being a father of three daughters and grandfather of six granddaughters, and i am deeply concerned by the precedent that this amendment would set. i don't want pligz making decisions -- i don't want politicians making decisions for my daughters or my granddaughters when he it comes to their health and well-being, but that's exactly what this amendment does. nothing made me happier than when any of my daughters announced their pregnancy and while i watched them grow and prosper in their health and well-being as they were carrying that child. and i was fully prepared to support a decision that they might make for the best health of that new baby and protecting her health to be able to offer

her love and care for a new child as i saw in my years. and i don't -- i don't want to stand here and think that somebody is going to make a decision in this room that affects what my granddaughters or my daughters have to think about. they want to -- if they want to restrict themselves, let them do it, but why do -- can we stand here and permit this to take place when we are trying to make people he healthier and better informed? but this amendment wants to take away that right. right now, the majority of proper health insurance plans do offer abortion coverage. now, this amendment would force private health insurance companies to abandon those policies, eliminate services, and limit a woman's option.

the amendment does not, contrary to statements made -- being made here on this floor, simply preserve the hyde language that has been in place for more than three decades. make no mistake, this amendment goes well beyond the concept of limiting federal funds from paying for abortion. this amendment would make it impossible for a woman who pays for her premiums out of her own pocket to purchase a private health plan that offers her the right to choose what is best for her, for her health, and her family's well-being. we have been working hard for a long time to eliminate discrimination against women in our current health care system, and right now our health care bill takes a balanced approach to abortion coverage. it preserves existing federal

law. women have fought this nation's -- since this nation's founding to have full rights under the law, including suffrage, including many other things, but unfortunately this amendment would force them to take a step backwards, and i don't want to see it happen, and i urge my colleagues please use your judgment, make your own choices about your own families, make your decisions as to what you would recommend to a daughter or a wife, but for god's sake, let the woman choose what's best for her. and i urge my colleagues to vote against it. with that, i yield the time. the presiding officer: the senator from maryland. mr. cardin: mr. president, thank you very much. i rise in strong opposition to the nelson-hatch amendment. and let me start off by saying that i support a woman's right

of choice. it's a constitutionally affirmed right. and i understand how difficult and divisive this issue is. that is why the underlying bill that we have before us carries out the compromise that has already been reached between the pro-choice and pro-life supporters. it represents maintaining the federal prohibition on funds, federal funds for abortion but allows a woman to pay for abortion coverage through use of her own funds. that's the current law and that's what the underlying bill makes sure that we continue. many of us thought that the health care debate is critically important, it's controversial. let's not bring the abortion issue into the bill. the nelson-hatch amendment would go beyond that. it would restrict a woman's ability to use her own funds for coverage to pay for abortions. it blocks a woman from using their personal funds to purchase

insurance plans with abortion coverage. if enacted for the first time in federal law, this amendment would restrict what individual private dollars can pay for in the private insurance marketplace. i might also point out that when you look at those who are supporting this amendment, you can't help but have some concern that this amendment is being offered as a way to derail and defeat the health care reform bill, because most of the people who are going to be supporting that amendment will vote in opposition to the bill. it's quite clear that the senate health reform bill already includes the language banning the federal funds for abortion services, so the supporters of this bill are not satisfied with the current funding ban. they're trying to use this to move the equation further in an effort to defeat the bill. i also would point out that this

is really wrong as it relates to women in america. i am outraged that the suggestion that women who want abortion should be able to purchase a separate rider to cover them. why would we expect this overwhelmingly male senate to expect women to shop for a supplemental plan in anticipation of an unintended pregnancy or a pregnancy with health complications? who plans for that? the whole point of health insurance is to protect against unexpected instances. currently there are five states -- idaho, kentucky, oklahoma, missouri, and north dakota -- that only allow abortion coverage through riders. guess what? the individual market does not accept this type of a policy, it doesn't exist. abortion riders severely undermine patient privacy. as a woman would be placed in the position of having to tell their employer or their insurer,

and in many cases their husband's employer, that they anticipate terminating a pregnancy. also requiring women to spend additional money to have comprehensive health care coverage is discriminatory. we don't do that for services that affect men's reproductive rights. and the last point i would mention is i hear frequently from my friends on the other side of the aisle that the statements that we make -- that is, those who support the bill, underlying bill, that this allows individuals who have their current insurance to be able to maintain their current insurance, builds on what's good in our health care system. well, this amendment takes away rights that people already have. so if you have insurance today as an individual that covers abortion services, if this amendment were adopted, you're not going to be able to get that. so we are denying people the ability to maintain their own current insurance if this amendment were adopted. it's the wrong amendment.

the policy is wrong, but clearly on this bill it's wrong. i just urge my colleagues to accept the compromise that was reached on this bill, the compromise. many of us who would like to see us be more progressive in dealing with this issue, remove some of the discriminatory provisions that are in existing law, we understand that we'll have to wait for another day to do that. let's not confuse the issue of health care reform. let's defeat this amendment that would be discriminatory against -- against women. that's wrong. i urge my colleagues to reject the nelson-hatch amendment. with that, i would yield the floor. mrs. boxer: mr. president? i would like to thank senators murray, lautenberg, and cardin for participating in our half-hour of debate at this time. our block of time is almost used. but i'd like to close this half-hour by saying one word that i think is a beautiful word, and that word is fairness.

fairness is a beautiful word, and it should always be the centerpiece of our work here. we should never single out one group of people for -- as targets. we should treat people the same. and it's been very clearly stated that the nelson-hatch amendment, like the stupak amendment in the house, singles out an area of reproductive health care that only impacts one group, and that's women. and it says to women they can't use their own private funds to buy coverage for the full range of reproductive health procedures. it doesn't say that to a man. it doesn't say to men you can't use your own funds to cover the costs of a pharmaceutical product that you may want for your reproductive health. it doesn't say that they can't use their own private funds for a surgical procedure that they

may choose. that is in the arsenal that they may choose for their own reproductive rights. so we say to the men of this country, look, we're not singling out any procedure or any pharmaceutical product that you may want to use for your reproductive health care. we're saying if a private insurer offers it, you have the right to buy it. we are singling out women. and, again, let me say this as clearly as i can, mr. president. we've had a firewall between the use of private funds and federal funds. senator reid has keep that in place in the underlying bill. he keeps the status quo of the hyde amendment. the group here who are coming on the floor continually -- mostly men; i think so far all men, there may be some women that

speak in their behalf but i haven't heard it -- are basically saying forget the firewall, forget it. women, you can't use your private funds and government will tell you what you can or can't do. you know, i'll tell you something, that's not what uncle sam should do. uncle sam should respect women, we should respe

>> i apologize for the delay but with this committee coming up we are a little busy. we will convene this hearing today. we have had a series of conversations obviously on an ongoing basis with a variety of people. we have a great frustration at the failure of the combined efforts of the federal government to make a substantial impact on the foreclosure issue. programs have been put forward but no one can think we have done a satisfactory job. part of it this mistakes of the past and one of the things we're determined to

do going forward, it is to change so that some of the problems that we have now will not continue. namely, we will not have a continuation where there are mortgages that we believe in the public interest to modify and no one has the authority to modify or if they do, he or she will dodge the responsibility by revoking some share responsibility that cannot be allowed to continue. we will straighten that out going forward. but we're in a current situation and many of us feel the bankruptcy from press their residence is ultimately going to be necessary to have substantial improvement and those who disagree, i think a particular burden in my mind to show it is possible to show foreclosures with

all of the negative consequences through society without it. do want to stress what we talk about mortgage foreclosure, we're not talking about compassion in this circumstance, some were misled and others were irresponsible part of the problem is even if people want to say they made their bed and let them live with it has reverberating consequences for the whole society. foreclosures create a circle of harm to the individual family to the neighborhood and municipalities and the whole economy because of the widespread disparity of mortgage-backed securities. slimming down the rate of foreclosures is important. this week we will be including a provision that will deal with a new class of foreclosure, those who

took out mortgages who are unemployed and do not want to make an issue if it is your sole source of and come. there is another program from philadelphia that will lend money to those unemployed and face the loss of their homes for the duration of their unemployment or some other point*. but we still have a problem of the mortgages that need to be disentangle. the we're doing with that the housing subcommittee has 10 minutes on each side is

been i thank you for holding this hearing this morning. i share his frustration we're both well aware of the very issue of tracking progress with the head ministrations program. . .

that ensures the lender has is complete picture of the borrower's financial situation as possible. to this end i was very troubled to learn some modifications are being performed with minimal documentation. after all it was this practice of no or low documentation that helped create a housing crisis we face today. we should not be in the business of perpetuating this practice. according to the treasury department, 375,000 trial modifications are set to convert to permanent modification by the end of the year however, jpmorgan chase recently disclosed in november, close to 25% of the trial modifications' failed to meet the first payment of nearly 50% of borrowers field to mccaul three payments. furthermore federal reserve bank of boston sites 30 to 45% of borrowers who received

modifications in up in default within six months. this raises some significant concerns i think about the ability of these programs to meet while a long-term expectations outlined earlier this year. these trenches are compromised by a shift in the root cause of foreclosure with the downturn in the economy as the chairman mentioned we are now facing more traditional causes of the foreclosure manly the loss of a job. as the program's progress we must have a realistic understanding of the capability and we need an obligation -- we have an obligation to our taxpayers to focus efforts first and foremost on families who truly need assistance. i look forward to hearing from our witnesses this morning and went to thank the chairman for holding this hearing. >> the gentlelady heels backend the gentleman from georgia, mr. scott is recognized for two minutes. >> thank you, mr. chairman. i can't think of it are pressing issue to deal with at this time than the foreclosure situation. it is alarming.

we ought to track for example reports that in feathered quarter of 2009 in my state of georgia had a 25% increase in home foreclosures over the third quarter and 2008. that is a total of over 36,000 foreclosure filings. that means one for every 98 households. that is absolutely devastating. but i want to turn just for a moment about what i think is an even more devastating situation. perhaps the most insidious side of the foreclosure process and one modification process and that is the unfortunate saddam of vulnerable homeowners in desperate need of assistance and saving their homes. it is one of the most tragic aspects of human existence in my opinion that whenever and wherever people are downtrodden others will move in and prey upon them and worsen their condition.

i was just contacted last night by a constituent who had contracted with a group called prodigy law group, a firm an urban california just to help him navigate the loan modification process else. and unfortunately what my constituents did not know, that's this firm had a reputation as being scam artists. in fact the better business bureau of california as well as other numerous people had the prodigy law group as a known as gemmer. as well as we debate this issue not only must we deal with this before us and we are doing but we have to find a way to put these predatory beasts that are prebon people who are already in bad conditions out of business. i yield back the balance of my time. >> the gentleman yields back. mr. hensarling is recognized for three minutes that actually i think a little bit more than that. i'm not sure exactly how much

time is left. three and a half. >> thank you, mr. chairman. by any standard of measurement the foreclosure mitigation programs of this administration and this congress have been abject failures. hope for homeowners $300 billion authorized at least as of some of the latest data available 1,000 applications, 50 loans closed by july. , affordable modification programs 75 billion-dollar cost supposed to help three to 4 million homeowners, 650,000 modifications' trial modifications. home affordable refinance program supposed to help four to 5 million homeowners, the latest numbers available 116,500. yet, we know that for closure rates and delinquency rates continue to rise for 9.9% in the

third quarter of 082 now 14.1% in fluff third quarter of phone line. the government tax payer funded foreclosure mitigation programs have been an abject failure. on the other hand, those who actually hold loans have a financial incentive for the borrowers who can work out to make modifications. and of the hope now program, as of the latest available datacom 4.7 million have been afforded workout plans since august of 07 with no cost to the taxpayer. there is no better foreclosure mitigation plan them a job. and unfortunately, the job creation program of this administration has also been an abject failure as we suffer through the highest unemployment

rate that we've had in a generation. 3.5 million fellow countrymen having lost their jobs since the president took office. the best way to foreclose, to have a foreclosure mitigation plan, again, is to create a job. and the best way to create a job is to tell job creators that they are not going to have to contend with the trillion dollar nationalist takeover of our health care system. that a 600 billion-dollar threatened energy tax to our economy will not take place. that the tax relief in this decade that brought upon one of the longest period of economic prosperity will not be allowed to expire so that tax rates on income and dividends, on capital gains increase. that some certainty will be brought to the market and the bill that chairman frank would bring to the floor tomorrow,

which will be a job crashing bailout bill that too will not become law. that is a plan. that is a recipe to create jobs in our economy. to take away the looming storm clouds of obamanomics and with this economy create jobs, and if you create jobs, then people can keep their homes. nothing short of that will work. we have to signal to those who will ultimately have to pay the bill that this is a congress, and this is an administration ultimately that is going to be serious about the debt and deficit. throwing more money out programs that do not work is absolutely insane and they do not work. why we are reconsidering more money to the same program is beyond me. i yield back the balance of my time. >> the gentleman's time has expired, and i recognize myself for two minutes and then i will go to mr. klein as our final opening statement. let me just say that it

particularly secondary limbs and investor interest which my attitude is where there is a will there is a way. i think these are things that can be worked through. another issue is appraisals. this seems a constant issue working for difficulties in loan modifications because some properties will overvalue on the we have and because there's little activity at the ground level right now the appraisals are coming in while and not necessarily reflective of the value. again this is something that is deepening the problem and prolonging the agony. last i want to point out that in many cases banks are also sitting on foreclosure proceedings. so they don't have to miss a surly right on the acid or take title and step in the shoes of the bar and that is creating another problem in the communities because people are not keeping up with mortgages, not keeping up with taxes and with their homeowners' assessments and condominium assessments and it's creating a whole problem in terms of the market ability of properties in those communities and value of the properties.

so, i just want to say we have a lot of work to do and i appreciate everybody coming here today giving their thoughts and ideas and we need to move expeditiously on this important issue. i thank the chairman. >> chernow recognizes ms. sheehan. i'me loans. we have approved or completed over 112,000 permanent modifications under hamp comegys proprietary modification programs or other programs offered by the gse is and fhfa. we did give some specific details of all of that activity in the written testimony for you to review. this year alone we have opened 30 chase home ownership centers in 13 states. over 60,000 struggling borrowers around the country have been able to meet with trained

counselors face-to-face. we plan to add additional 21 sites early next year. we have added over 2500 loan modification counselors in 2009 bring the total number to 5200 loan modifications counselors and 15 sites across the country. we have haulier over 2800 additional mortgage operation employees to handle the unprecedented volume so we now have nearly 14,000 home lending employees at chase dedicated to helping homeowners. we have handled over 12.8 million inbound calls and our outbound foreclosure prevention calls increased to 4 million in 2009 at from 400,000 a year earlier. and we have had 3.6 million visits to the dedicated website for love modifications where the borrowers have been able to download 1.6 million modification packages they can provide to chase. through hamp alone we have

offered trial plans to over 200,000 homeowners and are working hard to make those modifications permanent. based on our experience for every 100 hamp plants initiate from april for september, 200929 borrowers did not make the required payments under the trial plan making them ineligible for a permanent modification under hamp. 71 for worse made all three payments under the trial plans. of the 71, the 24 worst did not submit to get all the documents required for underwriting. 31 customers have submitted the required documents but the documents do not yet meet hamp underwriting standards. 24 hours had completed all required documents and are eligible for underwriting and out of those 2016 will likely be approved or have already been approved for permanent hamp modification. to the extent of our was not to

the customers making three timely trial payments, the servicer must fully underwrite the permanent modification. this includes verifying income, occupancy status and tax returns. specifically, bank of america has approximately 65,000 customers who've made more than three trial payments on time. these modifications are set to expire on december 31st. of those customers 50,000 have either not submitted some or all the required documents or the documents they have submitted revealed discrepancy the need to be followed up on with the customer. for these customers, bank of america last week sent by overnight mail an urgent request for the documents needed to be completing the process and set up a time frame required to avoid losing the treasury modification program benefits. we included a return prepaid express mail envelope to make the process as easy as possible. this is addition to the previous reminder calls and baling at

temps. we have dedicated substantial resource to these efforts in concluding the expansion of the fault management staff to nearly 13,000. all the customers that have now submitted documentation we are confident we can meet the treasuries requirement to fully underwrite 100% of these loans before the trial expiration. but despite these efforts it was clear that some portion of these customers were facing a similar expiration would not be able to complete the process and would miss the deadline. late yesterday after meeting the treasury department where we discussed our concerns about the expiration date the treasury released new guidance to prove to be very helpful and relief to the customers that have submitted all of their documents and where the servicers are still working on completing the underwriting or the process. we think that this new guidance will go a long way to a limit fallout on technical ground and we appreciate the assistance from the treasury board. today i also like to offer several areas of consideration

where hamp can be enhanced to help our customers. based on the treasury survey data, the total customers eligible today for assistance of the program is estimated to be 1.5 million. bank of america's share of that is about 340,000. bank of america has made offers to 74% of the population and has started the trial modifications with nearly half. this compares favorably to the latest treasury report for all servicers participating in the program. we believe this demonstrates hamp is an effective program in reaching certain bars however the program was not designed to assist borrowers who vacated homes or no longer occupy their home as a principal residence. nor as a program structured to assist for the unemployed or those already over relatively affordable housing payment of less than 31% of their income. .e encourage treasury to expand we found evidence the combined loan-to-value ratio or cltv please a critical role.

fer alt-a in a prime loans and low unemployment areas the default frequency was at least four times greater for the bar was under water by 20 per cent and it was for the borrowers with at least 20% equity position. we also found if a borrower has a positive equity unemployment plays a negligible role. we found that all borrowers with positive equity perform similarly no matter what the local level of unemployment. indeed negative equity is the most important predictor of default. when the borrower has negative equity, on employment act as one of many possible catalysts, greatly increasing the probability of default. hamp modifications or, as you are aware primero the payment reduction plan. hamp has three false. first, the gentry team to make the modification is a mortgage servicer rather than originator. second, it only considers the first mortgage payment taxes and insurance. it does not consider the bar

were still financial circumstances. a third and most importantly the program does not emphasize the three amplification of the bar were. what can and should be done? here are some imperatives. first there is no one-size-fits-all approach to the modifications. second, moving principal reduction hi year in the hamp modification waterfall will be the most natural way to raise the success of the modification program. what investors support this type of program? absolutely. all for the pleasure is devastating to a more work is also devastating to investors because recovery rates are low. the interest of the first we investor and of our work are totally aligned. third, any principal reduction program requires the had been attrition to address the second week problem head-on. fourth, we endorse three hamp bouck for homeowners programs. fifth, we need more transparency on the data. we are concerned if policies

continue to kick the can down the road working with a modification program that does not address negative equity, delinquencies will continue to spiral with no end in sight. thank you very much for allowing me to testify today. i am happy to answer any questions. it has been an honor. >> thank you, ms. goodman. we recognize mr. marks, corporation of america you have five minutes. >> thank you very much. it is very good to be here. my name is bruce marks, ceo and founder of naca, neighborhood assistance corporation of america. we have an interest in pan also want to respond to legally binding agreement with every major servicer and the two major investors in the country to do foreclosure prevention. so we have be of a custody,

saxon, fannie mae, legally binding agreements, with him, p.m. ac, freddie mac, one west, chase, wells fargo, we've got american homes, hsbc -- again, every one of the major servicers of the country and every one of the major investors in the country we have a legally binding agreement. there's only two real solutions out there. one is to restructure the mortgage for someone with a stable income to make a mortgage affordable, not to refinance, to restructure by permanently reducing the interest rate or the outstanding principal and make it affordable. and i say permanent. that means not a free set in five years to make the payment affordable. and we agree with what laura and some of the other people from the panel say. we should do more principle reductions so you can keep the interest rate at the market rate, make it affordable by doing principal reduction that clearly hasn't happened. when you do the other option is when someone does not have

stable income because they are unemployed is a forbearance agreement and lenders have been doing for parents agreements for many years and continue to do that. certainly we have homeowners here and some of them, dena holmes in the audience as well as paul roberts, dena went to the same the treen event, we've done 12 eatonton of the country each one has about 40 to 60,000 people come. and he has reduced his mortgage payment by $1,400 a month. he said in a fixed rate of 3% locked in.@ã

then at the fence so people in one place or walking away with the restructure saving $500, $1,000, sometimes $2,000 a month getting a job done. and they are close to almost 50% of the people who are coming through doing that. then you've got chase come out of all these servicers here is the worst. the fact of the matter is when you look at the documentation and what they are doing they are playing you. the fact the matter is when they say they are doing these trial modifications and all that and all of a sudden it is the borrower's fault because the homeowners can't get the

documents it's because why? the our underwriting then after three months. so, they are all -- the refuse to do onsite permanent restructure's. they put people through the process. they are impossible to work with. talk to the homeowners about that. so i think it is an interesting contrast that you've got the one who does the best and that's bank of america and the one who does the worst and that is chase. so when you get jaime dimond up here asking for the facts of that. let's talk about what the solutions are and what they should be. the m. h. es, the administration has to stop pleading, begging and bribing the server servers to do the right thing. because the fact of the matter is a lot of business models don't work. they are in the collection business. they are in the business of remitting that money to the investors. they are not in the hour origination business which is where we are now. the fact of the matter is where

is the occ and the federal reserve? they should be requiring to surface to do the mortgage restructure's, to do with the should be doing. that's the job, if that does not require t.a.r.p. money. clearly when we had a financial crisis we've required the lenders to take the t.a.r.p. money because there was a safety and soundness issue. we could have the same standard to say let's require the servicers, lenders to stop foreclosures to restructure the mortgages and make them affordable without the use of the tax payer money out there. thank you very much. i would be glad to answer any other questions. >> thank you. i thank the witnesses for their testimony today and i start with you, is sheehan, representing chase. you just heard mr. marks testimony. what you have any response or reply to some of his comments? >> we have been working with mr. marks organization for quite

awhile. we think the great job in their outreach events and bringing home owners to talk we have the process we have established in terms of how we do our intake for our defense. it is a different, slightly different process perhaps than bank of america and ensure each of us have different process these we've worked very hard to make sure we get the documents in, we have a dedicated portal, the image documents, put them together and then they go through the qualification process. i know that there have been bumps along the road up simply particularly building up the capacity to manage the outreach process with mr. marks but we continue to work very, a very hard and we will certainly follow up with him after this hearing and talk further about how we can do better. >> thank you. other witnesses have a comment on my question? anybody else?

when it comes to foreclosures i continue to be troubled by stories of mortgage fraud and individuals trying to make a quick buck by scanning innocent people. to any of the witnesses what steps, ms. sheehan or others, is chase or others seeking to ensure customers are not taken advantage of? is there enough information to be provided about what a legitimate foreclosure mitigation plan is as compared to a scam? is their litigation to be taken to make sure others are of scant? >> there's a lot of work that is to be done in the scam process. we've made a lot of process. we work with the ftc making sure we are getting information to them when we learn about scams going on. we have, you know, put together a booklet with the ftc we include in all of our conversations with our customers. we continually remind them they don't need to pay for a

modification. >> thank you. other witnesses on to answer the question? mr. marks? >> yes, the answer is if you consider those out there doing the fraudulent activity you have to consider them as religious and the only way you can't kill off all of the roaches by stomping them out you've got to cut off the food source. and the food source is the lack of ability some homeowner goes to the servers are to get a solution right then and there. so the focus should be on requiring the server service to get the job done because if you do that then you're going to prevent all of the fraud. clearly it should be outlawed no one should charge anybody to save their home because they should be working with the server servers and nonprofits who don't charge to do that. we have got to focus on hundred% getting the job done. everybody comes to the save the dream has tried to work with the servicer and failed. so we have got to put these

players out of business and the profits out of business because our job should become irrelevant if the surface are required to do these restructure's and forbearances. thank you. >> any other witnesses? >> i just want to add to what he was saying. i disagree with part of what he's saying because against opposing a bar where does not like what they are hearing from the surface or they may want to get legal representation to push the envelope. you have to be careful about regulating people out of these industries. it sounds good but there might be people that want additional representation. >> and we certainly agree with that because of these events we do a forensic audit of cologne's so on the picket people that you find 80% of all of the pain in the country there's something that was done illegally so when we do the forensic audit we find

the violation and then gives the bar were a better opportunity to get the long-term solution absolutely. >> thank you to the witnesses. my time is about to expire. i'm going to recognize ms. capito. >> there are two things troubling me. first of all is i guess the conflicting information. but the information that -- when i learned the last hearing in order to go to a trial modification you don't have to have your documentation before you. you can go to the charnel modification for three months without documentation. but according to what ms. sheehan is saying after you are requesting these documents they are not forthcoming with a large percentage of the folks that are trying to modify their loans what is the principle reason people are not forthcoming as the gentleman said they don't like what they are seeing or they are

postponing the inevitable. what is the reason for this? >> certainly the situation is that, a lot of the situations that we see or where they have submitted some of the documents but not all of the documents. and -- >> income tax -- protivin planet. >> it may be documents they don't have easy access to it like supporting death certificates or divorce decree. this is -- mr. marks made the point is a true origination process. it's truly underwriting alone so we are looking at as you said all of the different financial aspects of the situation and so it is a challenge for the borrowers trying to help them overcome the challenge. >> do you have the same situation at bank of america? >> it is true. when they were first setting up

hamp there was a lot of discussion whether or not we should require full documentation, parcel documentation or no documentation to start the period. over that time there was a general consensus that we supported that we have a lot of pent-up demand right now. we need to get the customer started as soon as possible so people here on the ec side of the program. they get no documentation or commitment to what you make, start the trial period, use that to get the documentation. hopefully you what actually solve the documentation problem at the same time in parallel with the three month trial payments. clearly we now look at the height of folly ratio to change the process slightly. we would advocate to make some documentation at least two documents, the hard ship affidavit which is a fundamental program, it also has language making sure everything when you are saying is truthful and the true 46 ot, that is pulling a tax return for some point in the future so if there are customers that potentially are going to

try to gain the system that might rule -- rutka stores up front and eliminate the conversion problems we have today. so, our view may be a good time to challenge what documentation we are requiring up front to get in the program. still allowing the time to finish the process to send them to the trial because that process still is a good idea because there are a lot of documents to get in trying to get them out front with what may be unnecessary delay to start the process. >> if i could add one thing to what they're saying it is not a difficult process. it is a simple process. if we can do it in the same day, seemed a solutions, all you need is three documents. you need the hardship affidavit, 4506t authorization and verification of income. so we do not believe he should do the no documentation. we believe in the trial of but you should underwrite on the one and get it done after three months of mckelvie on time payment it gets done. the other problem is that

homeowners have lost confidence in the servicers. and that, you know, so the process doesn't work, people don't trust the servicers out there and somehow we have got to reestablish the trust between homeowners and servicers but just get it done at the beginning, get the verification. i think the fact of the matter is the required more documentation at the beginning of the process. the administration made a simple process -- >> i would certainly say to have up front door irritation, like i said i was astounded to hear there was no documentation in the beginning. we had the problem when we started. i'm talking we back. the other thing i think ms. goodman brought up is the negative equity situation when challenged whether it was on a plane and driving a lot of this now, no, not really. it is negative equity or people underwater i don't see how you solve that problem. luckily i from a state where you don't really have that problem, the states like california,

florida, nevada, they are under water in amounts more than the median home price where i live and people have got to feel just desperate that there is no way they can get out from under. so, you know, with -- i think that is a huge hurdle to overcome and it is one you cannot do overnight. it's not like you've lost your job, you've got a new job. it's like you have time here and i think my time is up but any way that is just a comment. >> is it possible to respond to that? do you mind if i can do that quickly? >> we do have other people that want to ask questions. you can respond in writing in fact the chair encourages anyone who would like to provide additional testimony to give written testimony. it will be provided to the members appear. thank you. the chair next recognizes ms. waters for five minutes from california. >> thank you very much, mr. chairman. i apologize for not being able to get here earlier today.

let me just say i have spent a lot of time trying to understand why we can't get loans modified, do a loan modification in the same day that you are contacted with limited documentation. i'm not saying no documentation but, you know, this business of the trial for three months, and then the request for six months

worth of pay and statements and on and on, in my office we are helping people 75 and 80-years-old try to put together requests from servicers the professionals' work every day can't put together easily. and the other thing is many services, what do you lose so much? i mean, most of the time i'm getting calls about people having to submit a second and third time. further, i get the feeling that some of our companies have just brought in servicers and gave them a two and a half hour training and put them out there to try and do loan servicing and then tell my constituents they can't take into account certain kinds of incomes, that's not valid. i don't care where the money comes from. child support, on employment, social security, all of that should be taken but i'm talking

to services and get on the phone with, and i get on the phone with my constituents, i get a waiver. my constituents talk directly to the surface is to assist them. i am just amazed what appears to be incompetence. i am amazed at the request for all of this documentation, the bank statements, tax filings on and on and on. it is not necessary and they are not getting done. we know that they are not getting done. the white house is embarrassed about this and people are losing their homes who could remain in their homes and the recovery bill that's going to be on the floor tomorrow we are going to try to get something for the unemployed. because we have reverse mortgages where people get reverse mortgages, get money up front and then when the house is sold or what have you the money is paid back. we can do that with unemployment when the house is sold we can lend money upfront and they can

pay it back with a house is sold but i tell you there is not a real effort by the mortgage companies or the banks or the servicers or whoever. banks' own most of the servicing operations to do loan modifications. that's the bottom line. you don't want. and so not wanting to do them, you don't care about hamp or anything else. you just don't want to do them. so i am looking for stronger legislation to force these modifications. i'm looking for ways to expedite as mr. marks is explaining, and i didn't hear some of the other testimony. it isn't a lot that can be told to me about the can be done that people are not getting their paperwork in that somehow people signed on the dotted line and now they don't want to take the responsibility. i have been looking at if i may negative looking at some of

these mortgages where they readjust in perpetuity. the readjust every here for the rest of the loan up to 20 34, 2035 on and on. those should be modified on the spot. it has nothing to do with anything excerpted is a predatory loan. and for those servicers and those companies who have those bad products that are out on the market, and they have people in trouble and they are saying they can't modify those loans i am coming after them with some real legislation to do so. some of the loans are predatory some of them people have been defrauded and i wanted those loans modified even if they work every day and they can afford to pay the loan. those loans have to be modified along with people who don't have

the money because they've lost their jobs cetera. i yield back the balance of my time. there is not a lot to be said of this mess, mr. chairman. >> thank the gentlelady for questions and comments. .. now the administration and some of the members of congress would

like to change the bankruptcy code so that bankruptcy judges could write down principles. this doesn't just have to do with writing down an interest rate. it has to do with reducing principle on a loan. and if the borrower understands that if they wait and don't renegotiate because we might do these huge write-downs of principle. why would the borrower continue to work at the table to try to stay -- try to work out an abridgment for lower interest rate. that would be one of the questions that i would ask. mr. schakett, do you have a thought on that? what would happen "after words" to our efforts to restructure, to continue to restructure your loans should that kind of legislation passed.

>> circulate there is risk. went to work with a mortgage company in existing programs like camp to modify or judicial process you get a utter deal judicially. you're right there some risk that undermine the program. our view is that the congress and the administration determines we should do more for certain we better work i've been. i think there could be some more segments very high ltb, delinquencies, because there's a large problem. i think there should be some portents participatory program. it would be best served idly by putting out through a process that works for everybody and actually kind of sponsored by the administration itself versus the judicial process. >> one of the concerns i have here is having caught in the past against some of the policies that encouraged fannie mae and freddie mac to do some

of the types of lending they did with zero down payment loans, subprime loans, half of their portfolio been subprime. my concern is that we now go to a situation where if this crammed down concept goes through, it's going to have an effect in the future on mortgage rates. and i want to ask for faster sanders about this. what's going to be the effect going forward on the secondary market? are lenders going to have to reprice their consumer mortgage project or their consumer mortgage product in order to adjust for the risk to investors presented by something like bankruptcy creamed down? is that the likely consequence of legislation like this? i remember the justice department court justice john paul stevens comment that there's a reason why the bankruptcy code does not treat

residential mortgages like it treats credit cards or auto loans and basically what he said was we want to enjoy investment in certainty and encourage the flow of capital into this market. if congress keeps making mistakes, errors in judgment that blends the market like what was done with fannie mae and freddie mac and then comes back with crammed down our legislation like that, do we drive the private capital out of the market. i mean at the end of the day i don't think congress did any favors or disadvantaged people i pushing fannie mae and freddie mac in mandating that half of their goals mandated that has to that be subprime. that was a huge mistake for congress to make. zero down payment alone by fannie and freddie was a huge mistake. for now living with the fact that people took advantage of that, obviously. as everybody would. if you can get capital at those rates and with no money down, if you could flip homes 30% of the

homes in 2005 were flipped in this country. so we knew what was going on. let me ask you, professor your observation. >> well first of all i think you responded at the beginning that the write-down of principle law is desired by anyone that's in that position has serious moral implications about weeding and actually going to default. if you know you're going to get a principal write-down. but secondly on the secondary market fits. andy davidson knife votes a paper for the anti-macarthur and what we said was if we want to get the whole securitization market which is really, but important for the mortgage market and the housing market to recover we have to establish trust. so investors around the world, the united states pension funds have to trust that the securities market is going to work etc. and the problem is if we go to cram-down. they will send kind of a shockwave through the international markets that's all

my gosh were going to haven't entered judicial intervention and probably not going to be consistent. they will vary by jurisdiction. they are a terrible signal that were sent into the capital markets around the world if we pursue that. as they nobly intended as it is. >> thank you professor. >> pitcher will next recognize mr. clay from missouri for five minutes. >> thank you so much mr. chairman. i guess along the same lines as mrs. waters, some of the strategy that we see now deployed by mortgage holders and banks does not make good economic sense. why haven't we seen an effort to keep people in their homes instead of removing them? and then leaving the home vacant and reducing the value do you of

the surrounding property in the neighborhood. if it is about the bottom line and profit motive, would it not be a better business strategy to keep people in homes? doesn't the mortgage holder or the bank have to maintain utilities and to keep the water on in those facilities? let me ask someone on the panel and may be ms. sheehan or mr. schakett could take a stab at this. what is more cost effective for banks and mortgage holders, to evict and/or foreclose on a home is that more cost effective or would it be better to work out some arrangement even if it's

the homeowner been reduced to paying rent in order to keep them in that house? what's would be more tears to the banks? >> i would say that obviously when we look at our distressed borrowers, the first thing we do is make a consideration about whether or not we can achieve an affordable and sustainable monthly payment for their housing under their -- under a modification program. that's lower trying to do because generally speaking that is going to be more of from an investor or blender to them a foreclosure. so absolutely that is part of the process that we follow. >> well, but think about the difficulty when you remove a family from a home. then it's vacant. then you drop the overall value of the homes in that

neighborhood. your profit is reduced when even if you're able to sell that home. i mean, it's just a strategy mr. schakett you may chime in. >> there's no question we make that calculation versus take the home away from the customer. it recognizes that to take it away you have to pay the bills while he is not there. there's an eviction cost. it takes a while to market the property. that makes it even worse for us. so all of those calculations are a part of mass which weighs heavily in favor of the consumer. as long as we get a reasonable payment it is almost always better to keep the customer in the home. that is exactly right. >> but we are not seeing that trend now am on mortgage holders who are saying let's make every effort to keep people in their home. we're not saying that. >> sir, if i could respond?

>> gas. >> there's two separate pieces. servicer does nothing ago stu foreclosure. they do nothing. the other is the investor that we always here for the service is to say we'd love to do it but the investor says no. the fact of the matter is they virtually never ever contact the investor. what they do as they go to the trustee who tends to be the same entity who the service areas and say what does the agreement by the contract between servicer in the investor? so while they say it's the investor's problem, it's not. when you talk to the biggest investors out there that day we want to these modifications. we actually want to do the principal reduction that we are not being not. for the fact of the matter is the servicers lose very little if ago stu foreclosure. the investor loses and they very seldom ever talk to the investor and then the lawyers for the servicers as they take a conservative approach so they

find a reason to say no as a reason to say just by reading and pulling the service agreement the psa and a very conservative manner which hurts everybody as you say, sir. >> will dump the servicers have a fiduciary recyclability to the investors? >> and that's right. from our opinion we think they're in violation of their fiduciary responsibility because they find a reason to say no when their protest on the opposite when they should be saying yes. >> let me just make one more point and that is that many borrowers are so far underwater that they don't want -- but the current modification program doesn't work for them. you need to go to some sort of a principal reduction program. they still legally owed the money even if your mate in a lower payment. >> gentleman's time is expired. anyone else wants to make a comment is welcome to do so in writing for the record because that's helpful. the chair recognizes mr. baca

for five minutes. >> thank you mr. chairman. in my area we probably have the third of the fourth highest in the nation in foreclosures and it's really impacted the inland empire and almost in my neighborhood the homes that basically are vacant or i've just been rented. and it seems like many individuals who have lost their homes or are in the process of losing their homes are stating, why should i continue to pay the high rates that are currently there right now when the property value has even gone down so much so they end up vacating their home and then renting which is a problem that we have been trying. but my question pertains to the hamp program and its inability to help families whose breadwinners have become

unemployed because of the current economy. in many of these situations, it's actually better for the lender to foreclose on the property in a state is better for the lender to foreclose on the property. however there is evidence that permanent for unemployment for individuals and up hurting the taxpayers because of the government ownership of fannie and freddie. because of this there has been planned that actually call for limited modification for unemployment and actually call for housing vouchers or grants to be used. could you comment on the feasibility of such approach addressing what's possible pros and cons that may be and i address this question to mr. martin. >> thank you. one is that for someone who is really unemployed, services have done this for many years. whether they do for bear and four to six months. and they should be doing that.

so you don't need mha. he donate the subsidies to help the servicers to do that. so it's really an enforcement part. the other problem i think it's a very good point is that we are getting people locked down at a 2% interest rate for life. while that's a nice piece, but that shouldn't be the answer across the board. what should be the answer is let's put someone on affordable payment at a market rate and reduce the outstanding principal because that's better for the economy, better for the homeowner, better for the community. in other mha and understood when we see virtually no solution when there's a principal reduction or forbearance. everything is interest-rate reduction. we don't think that's the right answer across the board. we agree with the investors out there who say that's not the right answer across the board. they'd rather have a significant principal reduction closer to the current value of the property and keep the edges straight at the market rate and we think mha and hamp should be reconfigured to re-encourage

that. >> and you're saying that the current market today, not what it was before the foreclose, is that correct likes >> it's all about the affordable payment. so what to look at 31% of the gross income or you take the net cash flow and to determine an affordable payment, whichever is less. then, how you get there is up to the servicers and the investors and while you can reduce the interest rate to 2% or 3% like you've heard here to get to that, maybe you can keep it at a 5% interest rate and reduce the outstanding principal by $50,000 or $100,000 to get a closer to the current value of the property. >> mr. sanders would you like to tackle this? >> the whole issue of the interest rates is very fascinating. i think it's, you know, we are priced stressing it too much. and the one thing i want to add to that that was i'm hoping

everyone considers the fact that if we do in fact move to 2% of loans for a large segment of the population who are in financial difficulty etc., which is again very noble sounding. i want to point out that somebody is going to be holding those notes and when high inflation and high interest rates suddenly go kaboom in a few years which they will whoever is sitting on that paper is going to have catastrophic losses. right now it's the fed. danny, friday, is ensuring this. we have to again be very careful in the long-run implications for what we're doing here. >> the people who are holding those notes really are being the ones who took advantage of those individuals, right? why not make them lose? if those are the ones only in the notes, had all my losing because they got greedy in the first place. >> if pension funds and the federal reserve are the greedy ones then i don't think so. i mean, this is going to hurt a lot of people.

and it's just not what you call the greedy folk. it's going to the folks around the world who suffer when we get inflation and interest rates going up. >> okay, thank you. >> next the chair recognizes mr. miller for five minutes. >> thank you mr. chairman. i was puzzled by mr. royces questions that would have on voluntary modifications. the congress did something very similar in 1986 to what we've proposed with respect to how mortgages. to allow modification of mortgages on farms. and it would reduce the amount secured to the value of the collateral, the value of the forum which is all that really is secured anyway. treating the rest has been secured and then set a term and interest rate that's a little bit above prime. my impression from that. is that the modification

voluntary modifications took a huge spike and that the total number of modifications by courts with a relatively small percentage but it provided a template for other modifications. ms. morgan was very tip and volunteer modifications? >> no, there was not a dip in volunteer modifications. in a number of states around the country, until a supreme court decision on this topic ministates permitted the right, the so-called koran down a principal residence mortgage debt and bankruptcy court and those states didn't have any different situation with respect to the cost or availability of credit in the states that didn't have it. bankruptcy is a very difficult process for an individual or a family. chapter 13 bankruptcy is onerous. you have to live under very strict plan. you are monitored by the court for five years. this is not a choice that anybody chooses lightly. we have two situations now.

we have the situation and that the voluntary modifications are not happening and that it is all utterly out of control of the home over. they have no last resort that they can initiate themselves which can serve kind of as a backstop to the servicers responsibility to help them try to address whatever problems they are facing with the mortgage. so on the one hand, having the ability of the bankruptcy judge to help a homeowner out if a homeowner a last resort. we have another situation and that many of these distressed homeowners are distressed generally and already are filing for bankruptcy. they are already in bankruptcy court. it's just that the judge doesn't have the power to do the main thing that will actually ultimately make them successful and chapter 13 and able to continue to pay back all of their other consumer debt that they owe. which is that the judge doesn't have control over their

principal residence. for those homeowners, one thing that's especially important is right now most hamp participating in servicers aren't permitting folks who are already in bankruptcy to do a hamp modification. so they are really stuck. they can't get the voluntary modification because the servicers don't want to do it for people in bankruptcy. but the bankruptcy judge can talk them out to there so those people are really locked out of the process. >> ms. gordon, you mentioned studies based upon the differences from jurisdiction to jurisdiction between 1978 and 1994. there was a study by a fella named ludington at georgetown and i think he is a co-author who i think was that columbia. i think they were both economists and lawyers, bankruptcy lawyers that looked at the differences and found no difference in the availability of terms and creditors. were there other studies? >> there are not that many

studies on this particular issue, but there are a number of studies, some of which we've done at the center for responsible lending, some of which have been done at unc and other research institutions. on related issues, the fact is that every time there is a program -- there's an idea to help homeowners, the mortgage industry will come back and say, well this program is going to impact the cost and availability of credit. and for every one of those -- every time that's been asserted, studies have demonstrated it's not the case. >> and in eighth grade math class, we had to show our work. we just couldn't give an answer. we had to show how we got there. and i understand that the graduate level that's referred to as peer review. you have to set forth what your assumptions are, which are methodology was, what facts you allowed and then and walked to the analysis. and other scholars in the same spirit can look at it and test those assumptions.

mr. sanders, can you give me a citation to a published peer reviewed study that shows judicial modification makes volunteer modifications more difficult? >> that's a very good question. and i will send it back to you saying that we are, as laurie has testified to, such uncharted waters that all that matters is that a 50% decline in house prices will see how this works. no, i have no evidence that ms. gordon was referring to that this was going to be terrible. however, when we are with high unemployment and this far upside down then ministates or ten states in the united states believe that when i'll see it. >> professor sanders, isn't it true that on the bankruptcy laws every other kind of that is exactly the same way that the legislation we talked about last year would modify how mortgages? every other kind of secured

debt? >> that is true. >> thank you. >> but there's a reason why mortgages were not included in knots. >> that's the only reason? >> i didn't say that's the reason. i'm just a mortgages are not included here that the statement did not a reason. >> okay. >> gentleman from georgia. >> thank you, mr. chairman. let me start with this because we are in just a terrible situation here. i have had difficulty since we've been in this crisis understanding why there has not been the sense of urgency. now, we moved in good measure to save wall street. i had no argument with that. the credits were frozen up, we had to do that. but we did it with urgency.

we did it with abundance. we did it with $700 billion. the fed came in with another $1.2 trillion. but when we get down to the homeowner, we cringe and we crunch and we worry about these things. we got outside the box to save the american economy, focusing on wall street. and did a good job with that, no question. but when it comes down to rescuing the homeowner, which in large measure was the core cause of the problem, we stay in this box. why is it that we can't intelligently look at what i think is the foremost issue here? and that is reducing the principal. why is it, what is it about this? here we are at the end of this year. we will lose 2.5 million homes

to foreclosure. right now two out of every nine homes are in foreclosure or default. this is a problem of catastrophic means. why can't we do that? why can't we stop the foreclosure procedures while the modification process is going on? these are simple things. i just have a problem understanding why we can't do this. why can't we look at this whole modification program affordability program and understand that maybe 31% is too high, especially when people are losing levels of income. can somebody help me with this? let us start with the reduction of the principal.

i'd like to know from each of you why we can't do that. what is the problem here? >> and i just ask one thing. i think the question to servicers in the model when they look at the affordable payment do they have the process in place to do the principal reduction as well as the interest rate reduction and then when it comes to be a major pro-program or hamp, why don't they encourage the principal reduction versus just the interest rate reduction because we see very few of those up there. >> well, there are a few structural reasons of interest why servicers may not do this. one is that the biggest servicers than the one the service the vast majority of the loans are owned by the same banks of those who own the leaves of these homes, so they have a conflict of interest in terms of writing down the principal. servicers are generally making most of their money from their

monthly servicing fees, which is a percentage of the outstanding loan principal balance so they don't want to write on the principal balance. there are a number of other financial conflicts, to that have to have a right to residuals or buybacks or any number of structural things in the servicing industry that push against this. and so the real question is why have we not been willing to require that this happens if we just leave it up to the bank's interest, the banks have different interests. congress is going to need to require that this happens. and you are completely right that we have not put the energy into this issue, you know, the foreclosure crisis has basically been something of a 50 state katrina. you know, money out of the communities and leaving husks of neighborhoods in its way.

>> ms. goodman? >> i want to second what julia gordon said. the conflict of interest between the borrower and the second lien holder is huge in terms of writing down rentable. and in order before you can have a successful principal reduction program, you have to explicitly address the second lien. and there's no other option other than extinguishment. you may want to pay the bank to distinguish the second lien. you may want to let them take a loss over a period of time, but that simply has to be done. another problem that is often come up in terms of installed reduction is the moral hazard or strategic default problem. how do you keep borrowers who otherwise could afford to pay their mortgage from strategically defaulting or trying to take advantage of the principal reduction plan? and there's no single option here, but we have to think outside the box as you mentioned. yet you think in terms of shared appreciation features reducing all principal mortgages to be made with recourse. introducing an impact on credit

scores, limiting future access to credit or ability to borrow against the property. you have to consider a wide range of ideas, but certainly strategic default ratio plays a very prominent role in people's minds. >> thank you. my time is expired. >> gentleman from texas. >> thank you mr. chairman. and the witnesses for appearing. the 327 and 228, are we still having a significant number of them to come to the process? >> the bulk of those payment jocks are behind us. it's a pay option arm payment shocks that are left to come. >> and are we now finding that persons who had conventional loans, reasonable rates, are also starting to default? >> absolutely common negative equity is just a huge problem at this point. >> and is the problem one that

you can with some degree of anecdotal evidence indicate that certain communities have experienced to a greater extent than others? >> absolutely, when you go to the satish of events -- >> let me take your absolutely is the answer. can you identify communities by way of empirical and anecdotal evidence that have had a greater shock then some others? >> yes, but i would also add that this has become more across the board in virtually every community and in every state. >> given that it is embraced every community in every state but some more so than others. kindly identify communities that have extensively been hit harder than others. >> the minority communities --

>> defined minority communities. >> the communities where the majority of the population are african-american, hispanic, and other ethnic minorities and low and moderate communities. where the income is 80% less than the median. >> what about accident or design, this impact on these the communities that have simply been hit harder than others. what will happen in terms of recovery for these communities without some intervention? >> absolutely devastating. i mean, you see the foreclosures -- >> tell me about the loss of wealth for these communities. >> it is massive. i think they're other people on the pl who can actually empirically identify that. >> is there another who can do some empirical evidence. >> yeah, our research reports show what they call a spillover effect of the foreclosure, really in the hundreds of

billions of dollars. and there's two types of spillover effects. there's a general reduction in everybody's property. >> are you talking about the communities that were referenced by mr. marx? >> gas. >> for the record, i need for you to identify the communities that you are talking about. >> largely communities that are african-american or latino communities are of lower income communities. the more lower, middle -- >> will these communities recover without some specific intervention? >> absolutely not. >> is there an opinion -- to someone else have an opinion that you'd like to give with reference to this? anyone else? this is the moment. this is the moment to speak truth to power. you hear that phrase used quite a bit.

people fear speaking truth to power. somebody has got to tell the truth about what's happening to certain communities in this country. this is your moment. ms. sheehan? speak truth to power. >> we have established our motor ship in the most hard-hit communities and are there to help people through those centers, in person, and address their needs. and that's the process we have used to think about how we can best be useful. >> do you agree that certain communities are being devastated if not obliterated by virtue of what happened? whether it was by accident or design that this is happening? >> i don't have that kind of data here. >> without data, you do have anecdotal evidence. you are involved in this process, true? >> we are involved in the

process. >> what is your anecdotal evidence connote? >> what are evidence and experience has taught us is there a communities where we -- >> are you afraid to say it, ms. sheehan? our minority communities being devastated more? >> minority communities are having problems. we know that. >> are there problems? >> i'm going to yield three of my minutes to the gentleman from texas so he can continue. >> thank you, mr. president. ms. sheehan, let us not be euphemistic about this. let us not let our addiction prevents us from telling the truth. this is a moment in time when people need to hear the truth because we have people who are suffering. some are suffering more than others. if the minority community suffering more than some other communities? >> we know that we have an obligation to all of our

communities including our minority communities. >> so you subscribe to the notion that a rising tide all votes? >> we have an accountability to help our customers. >> i assume this is true. let me ask you this, if a rising tide raises all boats and i'm putting these words in your mouth you can extract them if you so choose. why is the titanic still on the floor of the ocean? a rising tide -- i'm bringing this up because this is a prevailing theory that if we do across the board to write a, we will help everybody and we don't seem to understand that some are being left behind, even with the best of intentions. we are leaving people behind. and this is something that i think god the nn are going to monitor and report on.

because the way for peace persons to tell the truth we may not get the entirety of the truth. for whatever reasons we don't want to face the facts, whether by accident or design, some communities are suffering more and they are not going to recover without some sort of specific intervention. that's the truth. anybody different without truth, raise your hand. let the record reflect that no one has raised a hand. my final comments, mr. chair, if i may as this. i beg you friends, let's get beyond splitting hairs and let's talk about how we are going to save this country. it's really weaker than any one group of people. it's about this country and we've got to do better. we've got to do better. all of these banks have got to do better. if you don't do better at some point you're going to force congress to drastic action that some would call an moral hazard because we have to have some

means of having these servicers take the responsibility and do something to help people who deserve and merit health. thank you, mr. chairman. >> i just want to take ten seconds on this. it's also been my view that while the rising tide may raise goes for those people who can't afford a boat the rising tide is very bad news, in fact. the gentleman from missouri. >> thank you, mr. chairman. thank you, mr. green. i am interested in order that i can read it and become more familiar with it, professor sanders, was there an administrative order or some kind of congressional vote that

directed fanny and freddie to make bad loans? >> no, i don't believe there is any administrative order in asking them or requiring them to make bad loans. >> the only reason i ask that is because earlier you in responding to one of my colleagues accepted in your comments that have happened and went on to describe how troublesome it was. we can try to get it read back. it was a question from i think mr. royce. you don't remember? >> i don't believe i would say that. i don't think danny and freddie purposely went out and made bad loans or were ordered to do so. is that what your question is? no, i wouldn't have said that. >> so that has to come up today since you've been here?

>> i think danny and freddie were only mentioned and that's what i said. i think the comment was that mr. wirth said something like they had obligation with 50% of their product and subprime nep data problem. that's the comment i believe he said. i think it was to give subprime and all that if i remember right. >> and we did not have a chance to rebut the ongoing incorrect assertion that's been rebutted by everyone from the board of governors of the federal reserve on down that the toxic loans that cause this housing crisis were primarily private loans that were securitized and the private securities markets. >> yeah, and are seen that. i hear over and over and over again that somehow either congress or president bush or somebody forced sani@@@@@@ that what ms. gordon, is that

what you believe? >> yeah, it's hard to know how to stop that from coming up over and over when it's just been clearly debunked as a reason.

>> mr. schakett, you know this whole term halo, another word hail it actually originated because west side of jerusalem for the landfill where they burned the trash the interpretation comes out of hail that is the first feel of what humans would be, burning and constant burning of the trash. and there are people who tell me they go to phone tree hell when they are trying to talk with someone about, you know, their mortgage and trying to you, you know, get some kind of modification that they actually go to phone tree hell and that they are being their concerns their interests, their desire, their frustration of being

burned standing on the phone. do you believe that we have been able to read out the fire in hell? >> no, i don't agree that we've put out the fire yet. our customers have had the ability to give the right answers. so i could appreciate your constituents being frustrated with that process. we continue to add resources and training and try to improve -- >> let me give the additional one minute and a half for biblical exegesis. [laughter] >> thank you, rabbi. i'm just concerned -- i'm wondering if the phone tree hell is one of the reason that 25% of

the borrowers who come in for modification end up losing their homes. they can't even go through the three payment trial. and they lose their home right off. is there a reason for that or can the phone tree hell be part of the reason, either you or ms. sheehan. >> i certainly believe the phone tree problems are clearly frustrating for our customers. the only good news about that if it doesn't take them through foreclosure so although we may not answer the phone timely, although we may have frustrated him, all those people are on foreclosure hold so no one is getting foreclosed because of it. that doesn't undermine that there's not huge frustration and we need to improve that. our most recent mailing that were mentioned earlier was we sent out 50,000 letters to try to say exactly what worse a missing from his customers and what it did to comply. so we took an attempt to make sure customers who didn't handle it knew exactly what we needed

to down and give them an easy way to respond back to us to get these modifications complete. so again i appreciate that we frustrated our customers that we have not foreclosed on them in the meantime. >> gentleman from florida. then i'll just take my last minute i have to say this. we are terribly frustrated by what's happening. we will move forward on the unemployment. amassing a fossil of problems but i do think this is helpful and a bill that comes to the floor will have $3 billion to be advanced to people who are unemployed to help them avoid it. we will continue but the most important thing is the point that the gentleman from california has consistently made. i went forward, this committee will make a very high priority has been legislation early next year that will prevent us from being and trapped in this again. it will have to be for any

residential mortgage one-party that is solely, fully regally responsible for these decisions and people who want to invest in mortgages, people who want to make secondly in love, people who want to invest in the securitization will do so going forward, knowing that those rights are subject, whatever they have, to the responsibility of one individual to make those decisions because it is a terrible example of our violating a principle that to exist in the law. you should not have important decisions to be made in the society that cannot be easily made by somebody. and so that is something the gentleman from california was an early -- identified that early. and that doesn't get us out of this current thing. we worked with many of you going forward to make sure that we have that, so that we will not have this shifting of the blame and forth. beyond that, we appreciate this hearing and we will continue to press people in the administration as we will do in

the next panel to act on some of the suggestions. i also have a package of statements to put into the record without objection. the ranking republican asked me to put in a statement for the homeownership. and the pico network of community organizations. and i know that one comes from people in massachusetts and new bedford. so without objection, they will be part of the record and a panelist dismissed without thanks for a very useful discussion. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> we need people to leave take their conversations outside so we can get the panel going. no one should be standing still.

they should either be walking or sitting. we will now turn to our second panel. we appreciate the attendance of the public officials who are responsible. and i did not follow you who are proceeding to asking the public officials to testify first. it is not out of any lack of respect for their commitment and integrity of which we are appreciative but it did seem to me today would be very useful if we had heard from some of the questions, criticisms first and then could have them respond to them. and i ask people at the door to please leave. and we will now begin with herbert allison was the

assistant secretary for financial stability at the apartment of treasury. >> chairman frank and members of the committee, thank you for the opportunity to testify today about the treasury department comprehensive initiatives to stabilize the u.s. housing market and support homeowners. the administration has made strong progress or anti-mapmaking home affordable programs. but even though the number of homeowners being halt continues to grow, we recognize that home affordable modification program or hamp faces challenges in converting borrowers to permanent mortgage modifications and in fostering effective communications between servicers and borrowers. our most immediate challenges converting trial mortgage modifications into permanent modifications. services reports that about 375,000 trial modifications will be more than three months old and due to the decision before december 31. treasury has launched an aggressive conversion campaign to increase the number of

permanent modifications. we have streamlined the modification process and required conversion plans from the seven largest servicers. treasury and fannie mae have assigned teams to work with each service are and to report daily on their progress. we are engaging all anyone hunted field offices and hundreds of state and local governments in the effort. we have enhanced our website to provide borrowers with a simplified way to navigate the modification process using instructional videos, downloadable forms, and an income verification checklist. next week we will hold our 20th borrower events connecting servicers, housing counselors, and homeowners. in addition, we have brought in executives from the servicers four times to washington on including just yesterday to discuss ways of accelerating conversions. another challenge is helping unemployed homeowners. hamp is designed to enable many unemployed homeowners to

participate. borrowers with nine months or more of unemployment insurance remaining are eligible to include that income for consideration in their modification request. we recognize however that some unemployed borrowers will have trouble qualifying. treasury is actively reviewing various ideas to improve program effectiveness in this area. while remaining focused on helping borrowers as quickly as possible under the current program. a third challenge is preventing foreclosures of homeowners eligible for hamp. during the modification trial. , any foreclosure sale must be suspended and no new foreclosure proceedings may be initiated. we prohibit foreclosure proceedings until the borrower has failed the trial. india's been considered and found an indelible for other foreclosure prevention options. we are working with stakeholders

to review, improve, and monitor compliance with our roles so no borrower being evaluated for hamp is subject to foreclosure during that process. a fourth challenges transparency. on august 4, our public monthly reports began including trial modifications by each service are. october's report added data on trial modifications by state. upcoming reports will show permanent modifications by servicers and measures of servicers responsiveness to borrowers. we are requiring servicers to send notices that clearly explain to borrowers why they did not qualify for a hamp modification and how they can ask for a second look at their application. we will also provide additional transparency of the net present value or npv model and key component of the eligibility test. we are increasing public access to the mvp which includes the

methodology. we are also working to increase transparency of the npv model itself so counselors and borrowers can better understand how the model works. hamp is on track to provide a second chance for up to 3 million to 4 million borrowers by the end of 2012. based on a recent survey of servicers we estimate that as the beginning of november at 21.5 billion homeowners are eligible for the program meaning they are both 60 plus days the link went and likely to meet the hamp requirements. to put the current stage of hamp in context, we should compare the 1.5 million eligible homeowners to the more than 680,000 borrowers who are in active modifications and are included among the 900,000 borrowers who have received offers to begin in trial modifications. on average, borrowers and trial modifications have other payments reduced by over $550

per month, down roughly 35% from their prior payments. hamp has made great strides since modifications began in may, but we have a long way to go. we will continue to work closely with housing counselors, state and local governments, servicers, homeowners, investors to enhance the programs performance and to help keep americans in their homes. thank you. [inaudible] >> chairman frank and members of the committee thank you for the opportunity to testify in the ftse and government response to the mortgage foreclosure crisis. mortgage is going to discuss and declining prices have been fundamental causes of absurdity. structurally unsound mortgages and historic were recruited

financing has led to unprecedented increases in mortgage@@aa, often a failure to take action as we approach to working with borrowers. in 2008, the fdic needed to implement these proposals advocated by chairman bayer when it was the federal bank which had tens of thousands of delinquent mortgages on its

books. the goal of the fdic is modification program was to achieve the best recovery is possible by converting distressed mortgages into performing loans over affordable and sustainable over the long term. today, almost 24,000 borrowers have received ossification due to this program. the problem nationwide however is missed. while some servicers have been affected much more have been done. last fall the fdic in the gated we call mod in a box. earlier this year the fdic applied as practical experiment and low modification and working with treasury and other agencies on recommendations for the home affordable modification program or hamp. the fda supports hamp as part of the solution. in addition, we continue to remain open to new approaches that may be necessary to respond to the scope and changing character of the mortgage problem. our loss share and agreements

for failed banks require either the fdic model program or we have to continue to push for responses. for example, we burst temporary forbearance for borrowers that lose their jobs in recession. we also will provide gloucester in finance to support principle breakdance to the guys that values. the ftse's experience has provided a number of lessons learned that we would like to share with the community. i would like to emphasize one key points. laws that make good business sense and help consumers maximize recovery on troubled mortgages. first, and foremost early communication and modification efforts give the best chance of success. success is much for likely if you contact the borrower earlier, give a mod offer and give them on for an experienced delinquency. effective communication with borrowers acquires an effective technology infrastructure, thorough staff reading and a consumer report or consumer

service focus. second, the more affordable the modification below were the default rate. until recently, far too many mods actually increased the monthly payments. no wonder they often failed. we also matched must address the lanes as part of the problem. third, close working relationships includes borrowers bonds and modifications to success. not surprisingly, counselors have much more credibility with our worse. fourth, lenders and servicers must be flexible to address new challenges, problems caused by job loss or water loans, we will employ new approaches. finally modifications should be kept as simple as possible so that servicers can apply a streamlined approach and borrowers can understand their options. throughout the financial crisis, the fdic has worked with consumers and many others to reduce unnecessary foreclosures in the devastating consequences they impose on our communities.

low modification, refinancing, temporary forbearance for over borrowers and principal reductions are all tools to achieve these goals. we continue to support treasuries hamp as a major part of the solution but we all know we must remain open to new approaches for unemployment and increasing numbers of under water loans. above all, the fdic remains committed to achieving our core mission of protect the the policies and maintaining confidence in our system. thank you for the opportunity to testify today and i would be happy to take any questions. ..

to performance of mortgages and various foreclosure mitigation strategies including detailed information, regarding loan modification efforts. it is a valuable tool that helps us focus our supervisory actions based on quality the data. for example, march of 2009 in response to higher redefault rates on modifications we directed the largest national banks servicers to review their modifications.

and policies for future modifications to improve their sustainably. subsequent to that direction we have seen both the volume and quality of loan modifications in payment plans improve. during the second quarter homeland retention actions. plans a and loan modifications increased by more than 20%. we are still finalizing our next report that expect an even greater increase in nearly 70% in the third quarter. actions taken under the administration's, affordable modification program represent a portion of the homeowner assistance provided to date. national banks also help homeowners through programs that do not require taxpayers supporting incentives. between january 1st, 2008, and june 30th, 2009, national banks and thrifts is implemented more than 1.8 million helm retention actions. of these less than 115,000 were

made under hamp. hamp numbers increased in the summer and fall of 2009 but still represent only a portion of national banks homeowner assistance efforts. in addition to the increasing volume the character of comb retention actions is changing. more than 70% of modifications made in the second quarter of 2009 reduced the borrowers monthly principal and interest payments. as a result delinquency rates subsequent to modification are improving in more recent vintages. improving sustainability of modifications and returning far worse to a positive cash flow reduce the eventual foreclosures , provide homeowners and opportunity to keep their homes and minimize losses to banks and investors. the occ fully supports service participation in hamp and administration secondly modification program, but regardless of the types of programs implemented, national

banks have an obligation to ensure that the regulatory ports and financial statements accurately and fairly represent their financial condition. on monday we issued guidance to our examiners stating that we expect banks to follow generally accepted accounting principles and maintain adequate allowance regardless whether a loan is modified. adherence to the sound underwriting practices including adequate documentation of the borrowers qualifications for and ability to repay modified mortgage is essential. while home retention actions are improving we hear too many consumer complaints of lost paperwork, bad guidance, long waits and difficulty simply contacting servicers. the volume of complaints is unacceptable. we have directed national banks to improve operational efficiency to keep up with volume, improve their internal process these and answer the customer's concerns accurately

and promptly. is part of our ongoing supervision, our examiners assess banks complaint resolution process these and require corrective action for identify deficiencies. at the same time, server servers need to improve operations other factors contribute to the low number of hamp charnel plans being converted to permanent modifications. servicers report consumers often feel to the kafeel to provide necessary verifiable documentation of ability and willingness to repay their debt. in some cases loans are already considered affordable under hamp's debt to income guidelines and in other cases cannot demonstrate a valid financial hardship. increasingly the financial condition of many borrowers has deteriorated. so far that is not possible to modify a loan and meet hamp's net present value requirement. while hamp and others show progress we must be realistic about the continuing effect of

high unemployment and depreciated home values. these macroeconomic factors weigh in on the performance of the residential mortgage portfolio and drive delinquencies and foreclosures. in these difficult economic conditions effective loan modifications will be an important tool to help responsible homeowners applied preventable foreclosures, but they will not help everyone. as a result, we will see further deterioration, low performance in the months ahead. my written testimony provides additional dqcógógógógógógógógo3

madam president? the presiding officer: the senator from texas. mrs. hutchison: madam president, i rise today to talk about another amendment that is pending, the nelson-hatch-casey amendment. and this is the amendment that i think has been discussed in the last day as well that is the amendment that would assure that no federal funds are spent for abortion. that was unclear. it is unclear in the underlying

bill. and i think it is very important that we talk about it, that we make sure that it is very clear exactly what the nelson-hatch-casey amendment does. and that is it would bar federal funding for abortion, which is basically applying the hyde amendment to the programs under this health care bill. since the hyde amendment was first passed in 1977, the senate has had to vote on this issue many, many times, probably just about every year. and i have consistently voted to prohibit federal funding for abortions, as i know my colleague and friend from utah has done, as well as the democratic sponsors of this amendment. and yet, it seems that some members were on the floor last night misconstruing exactly what the hatch-casey-nelson amendment does. specifically, their claim was that the hyde