WASHINGTON, DC - U.S. Senator Daniel K. Akaka (D-Hawaii) today voted to support the Housing and Economic Recovery Act of 2008.  It passed the Senate today by a vote of 72-13, following House passage Wednesday (7/23). 

Akaka made the following Senate floor statement: 

            The Housing and Economic Recovery Act of 2008 will meaningfully address the housing crisis in our country.  I appreciate the leadership of my friends, Banking Committee Chairman Dodd, and Ranking Member Shelby in developing this vital legislation.  

Too many families are losing their homes.  Not enough working families have access to affordable housing options or are able to secure credit.  This legislation protects homeowners across the country, prevents foreclosures, increases the supply of affordable housing, and assists our nation's veterans. 

            This Act will modernize and improve the Federal Housing Administration (FHA) to provide homeowners with additional access to fixed rate mortgages.  Additional resources will be provided by this legislation for housing counseling to assist homeowners in finding solutions to their difficult situations.  Mortgage disclosures will be made more meaningful to consumers by this Act.

            My home state of Hawaii has a severe shortage of affordable housing. Hawaii ranks as the most expensive housing jurisdiction in the country according to the National Low Income Housing Coalition's 2007-2008 Out of Reach report.  This bill creates an affordable Housing Trust Fund and a Capital Magnet Fund to increase access to affordable housing. These additional resources help build and preserve affordable housing units for working families.

            I also appreciate the inclusion of provisions that would assist veterans and servicemembers during this housing crisis.  I especially appreciate the inclusion of a provision that is derived from my legislation, S. 2768.  This corrects an oversight in the Economic Stimulus Act of 2008 and extends the temporary home loan guaranty increase to veterans so that more of them can realize the dream of home ownership.

            The VA Home Loan Guaranty was part of the original GI Bill in 1944. It provided veterans with a federally guaranteed home loan with no down payment.  This landmark legislation made the dream of home ownership a reality for millions of returning veterans.  The amount of the home loan guaranty was last adjusted by the Veterans Benefits Improvement Act of 2004. The maximum guaranty amount was increased to 25 percent of the Freddie Mac conforming loan limit determined under Section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, as adjusted for the year involved.  Using that formula, because the Freddie Mac conforming loan limit for a single family residence in 2008 is $417,000, VA will guarantee a veteran's loan up to $104,250. This guaranty exempts homeowners from having to make a down payment or secure private mortgage insurance.

            The newly-enacted Economic Stimulus Act of 2008, however, temporarily reset the Fannie Mae, Freddie Mac, and FHA home loan guarantee limits to 125 percent of metropolitan-area median home prices, without reference to the VA home loan program. This had the effect of raising the Fannie Mae and Freddie Mac limits to nearly $730,000, in the highest cost areas, while leaving the VA limit of $417,000 in place.  This important group of Americans may benefit from an increased home loan guaranty in this time of economic uncertainty.  I am hopeful that this increased guaranty limit will assist those veterans and servicemembers who are struggling to purchase a home during this time.

            The bill also authorizes a financial education and prospective homeownership counseling demonstration program, which I helped develop with my colleagues Senators Menendez, Carper, and Dodd.  This program will help working families prepare for purchasing a home.  We must provide greater financial literacy opportunities to empower families to make better informed financial decisions.  I will work with my colleagues to secure the necessary funding so that the Department of the Treasury can effectively implement and evaluate this demonstration program.

            This essential legislation helps families remain in their homes, expands access to credit, creates more affordable housing opportunities, provides much needed improvements to veterans' housing benefits, and authorizes a prospective home ownership counseling financial literacy demonstration program. 

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