Thursday, October 20, 2011

U.S. Senator Johnny Isakson (R-GA)
Floor Statement on Housing Loan Limit Extensions

I thank the distinguished Senator from New Jersey, Mr. Menendez, for his leadership on this issue.

Thank you, Mr. President.

Let me try to dispel what concern there may be and the concern I heard right before we adjourned in August as to why not to extend the loan limits. People were afraid--and I understand the fear--that it might cause some additional liability in cost to the government and the taxpayers.

Let me make something crystal clear: We are going through a terrible foreclosure problem right now in this country, not because of loan limits but because of underwriting. Underwriting today, because of the ramifications of the real estate collapse, is the most pristine underwriting I have ever seen.

I was in the business for 33 years--since 1966. I have seen a lot of housing recessions go by. I have seen a lot of difficulties. This one is the worst I have ever seen, but it was not caused by the amount of loans made. It was caused by underwriting.

As Senator Menendez has said, this will pay the government back because of the fee associated with the loan, in the first place. In the second place, it will answer the big objective we need to start applying in this country, and that is doing no more harm. A lot of the problems that have been manifested in the real estate industry have been manifested by our doing the harm, either in what we imposed on Freddie and Fannie or what we did not allow to have happen.

The restrictions now on mortgage underwriting under Dodd-Frank and the requirements that are now true in all of our underwriting agencies are so strict that the underwriting of loans is so pristine that only the best of the best is being made. The unintended consequence of not extending these increases in August caused a number of real estate transactions that were made to never close. Because the limit went down, therefore, the loan went down.

No one in this body should confuse the amount of a loan with its ability to be repaid. They need to understand, it is the underwriting of the loan that ensures the repayment.

This, as the Senator said, will add an income to the U.S. Government. It will not add additional pressure on the U.S. taxpayers. It will at least give us breathing room in a housing industry that is still struggling terribly.

So I would ask any of our Members who were objecting back in August to these loan limits being restored, please come see me. I do not know a lot about many things. I know a whole lot about this because I made my living in this all of my life. I have no interest anymore, so there is no self-interest, except to know we are in deep trouble in our economy.

You are never going to get 9 percent unemployment down until you bring construction back. You are never going to get the American consumer to have more confidence until they feel as though the value of their homes is secured. Those things are not going to happen if a reluctant Congress continues to pass suppressing legislation or keep these loan limits down rather than doing things that will do no harm and help the housing market.

So I lend my full support to Senator Menendez and what he has done. I ask for favorable consideration by our colleagues in the Senate.