Senate Proceeding on Apr 23rd, 2009 :: 4:30:30 to 4:40:25
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4:30:30 to 4:30:50( Edit History Discussion )

Claire McCaskill: quorum call: ms. mccaskill: madam president? the presiding officer: the senator from missouri. ms. mccaskill: madam president, once -- the presiding officer: we're in a ms. mccaskill: i ask that the quorum call be set aside. the presiding officer: without objection. ms. mccaskill: madam president, once upon a time, someone had a good idea about trying to open up the mortgage

4:30:30 to 4:40:25( Edit History Discussion )
Speech By: Claire McCaskill

4:30:51 to 4:31:13( Edit History Discussion )

Claire McCaskill: market to as many people as possible, and between that moment and now, we have seen a giant economic crisis that has mushroomed out of control, and we've sat around here for months now trying to figure out how did it happen and why did it happen. and one of the reasons it

4:31:14 to 4:31:34( Edit History Discussion )

Claire McCaskill: happened is just using common sense. we said to people, you can go make money by talking people into borrowing money, and you don't have to worry about whether they pay it back. we said to a market, the mortgage market, we said, you

4:31:35 to 4:31:56( Edit History Discussion )

Claire McCaskill: know, if you go talk people into borrowing more money than they can affor they can pay it back. you don't immediate to worry about that because you're going to -- you don't need to about that because you're going to make your money anyway. the people were not a partner to the risk. that's how you got people

4:31:57 to 4:32:18( Edit History Discussion )

Claire McCaskill: qualifying for loans, by wearing a special costume and a photograph. they were called liar loans. everybody knew people were lying to get these loans, but no one was doing anything about it because the people noaa who were making the loans were make the money. and they had no risk. now, you would think that this occurring, that we would now be

4:32:19 to 4:32:39( Edit History Discussion )

Claire McCaskill: on hyper alert for the exact same set of circumstances. but we're not, because it's going on today as we speak. you turn on any cable channel almost in america and before midnight you're going to see an ad that says to seniors, you need to take advantage of a

4:32:40 to 4:33:00( Edit History Discussion )

Claire McCaskill: great government program, a government benefit. you can be paid cash for the value of your house without any risk. they're called reverse mortgages. it is a type of home loan that converts the value in your home that you have acquired over a

4:33:01 to 4:33:23( Edit History Discussion )

Claire McCaskill: lifetime and converts it to cash. now, in and of itself, this is not a bad concept. people oughto be able to borrow against the value of their homes. we do it with home equity loans. here's the problem: we've got the people closing these loans that have no skin in the game. guess who's insuring all these loans? we are.

4:33:24 to 4:33:46( Edit History Discussion )

Claire McCaskill: the taxpayers. there is no risk. to those people paying for those ads on cable tv, no risk. reward, no risk. we're taking the risk. so if in fact the housing markets go down and the someone's property goes down and it's time for that loan, the value of that loan to be recovered when the white house

4:33:47 to 4:34:09( Edit History Discussion )

Claire McCaskill: house is sold, if it doesn't -- when the house is sold, if it doesn't sell for enough money, guess who's left holding the bag? hello? subprime mortgage, chapter 2 -- we're back. we've got the same issue as we've got with the subprimes. since we began in program in 1990, h.u.d. has endorsed and

4:34:10 to 4:34:31( Edit History Discussion )

Claire McCaskill: insured 500,000 loans. but wait ... we took the cap off recently. we anticipate that h.u.d. will in fact insure 200,000 of these loans this year alone. so we've done 500,000 loans

4:34:32 to 4:34:52( Edit History Discussion )

Claire McCaskill: since 1990 and we're going to do 200,000 loans this year. we're talking about a huge growth in the potential liability to the american taxpayer. these are complex and expensive loans, and for many elderly, the

4:34:53 to 4:35:14( Edit History Discussion )

Claire McCaskill: equity they have in their home is it. with the economic circumstances we have right now, there's going to be a lot of pressure on the elderly to enter into one of these reverse mortgages, maybe to help other family members that have lost a job. so it is really important that

4:35:15 to 4:35:36( Edit History Discussion )

Claire McCaskill: we fix this program. it is embarrassing that we let the subprime mess go for as long as we did without anybody saying, whoa! hold on. it will be doubling embarrassing if we allow this reverse mortgage situation to go down

4:35:37 to 4:35:57( Edit History Discussion )

Claire McCaskill: the exact same path. with these loans we're also seekers as they increase dramatically in number and value, we're also seeing an increase in fraud. the h.u.d. inspector general has en working in the reverse mortgage field and, as all the other inspectors general in our

4:35:58 to 4:36:19( Edit History Discussion )

Claire McCaskill: country, hasone a great job beginning to find problems of specific nature as it relates to aud. some of it is where we've got inflated appraisals. i mean, some of it is where you've got shoddy repairs being done, which decrease the value of the home, which increases the

4:36:20 to 4:36:40( Edit History Discussion )

Claire McCaskill: risk to the taxpayer. some of it is people continuing home, past the time they should, past perhaps the death or the moving out of the senior that did the loan in the first place.?? we -- and why is the fraud increasing?

4:36:41 to 4:37:02( Edit History Discussion )

Claire McCaskill: fraud is increasing. all the bad actors who were over there in subprime, they're looking for a new extreme of money. so they're all sliding over and saying, hey, let's start marketing these reverse mortgages to seniors. we have got to do someth about this now. i filed an amendment to the legislation that is in front of

4:37:03 to 4:37:23( Edit History Discussion )

Claire McCaskill: the senate that will do some important things in terms of fraud prevention and detectio detection and enforcement provisions. we are going to require the borrower to report the termination of the residence to h.u.d. require that in the case of a property that is purchased with the proceeds

4:37:24 to 4:37:44( Edit History Discussion )

Claire McCaskill: mortgage, that the property is owned and occupied for at least 180 days so that we do not have the flipping that we've seen in the subprime morgt t market. require these properties being appraised by certified appraisers -- h.u.d.-certified aprayers. we've got verify the the

4:37:45 to 4:38:06( Edit History Discussion )

Claire McCaskill: purchase price and make sure too high in relation to comparable properties. you can imagine how i this is right now since our housing market values are in such flux. to require the counselors to report suspected fraud or abuse to the h.u.d.'s inspector general and to inform perspective borrowers how they

4:38:07 to 4:38:28( Edit History Discussion )

Claire McCaskill: can report fraud and consumer abuse. require that the lenders and counselors maintain a system to maintain compliance. ensure that the h.u.d. inspector general has the authority to conduct independent audits of the lenders. wouldn't it have been nice if we had done this back with subprimes? conduct independent audits and inspections of reverse mortgage

4:38:29 to 4:38:50( Edit History Discussion )

Claire McCaskill: lenders to ensure they're in compliance with the requirements and to compare the reverse borrower's records against the social security's death file for early indications of payouts. the pay the recipient. -- the recipient of the reverse mortgage. provide any limitation on when

4:38:51 to 4:39:11( Edit History Discussion )

Claire McCaskill: criminal charges can be brought against fraud perpetrators i this area be calculated on when we find out about the criminal activity, not when it occurred. because many instaes we may not find out about the fraud until the elderly person dies and then they find out that maybe they thought that they still had value in their home, but they were lied to.

4:39:12 to 4:39:33( Edit History Discussion )

Claire McCaskill: and this is an important one: provide that advertising for reverse mortgages cannot be false or misleading and must present a fair and balanced portrayal of the risks and the benefits of the you know, the fraud is the first step. and we've got -- we've got -- going after fraud is the first

4:39:34 to 4:39:54( Edit History Discussion )

Claire McCaskill: step, but we it is very, very important that we protect our predatory lenders. you know, when you see these on tv, it sounds be true -- it sounds too good to be true.

4:39:55 to 4:40:15( Edit History Discussion )

Claire McCaskill: government benefit, no risk. but there is a huge risk. there is a risk of a senior paying more than they should for a product that doesn't work for them and a very big risk for the taxpayers of this country. so i look forward to working with the senate judiciary banking com

4:40:16 to 4:40:25( Edit History Discussion )

Claire McCaskill: well as h.u.d. and the h.u.d. inspector general and g.a.o. to get the things done we must do to clean up this problem.