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Senate Proceeding on Dec 17th, 2010 :: 3:30:25 to 3:38:05
Total video length: 8 hours 12 minutes Stream Tools: Stream Overview | Edit Time

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Johnny Isakson

3:30:21 to 3:30:43( Edit History Discussion )

Johnny Isakson: debate on this treaty at the beginning of next year. and, with that, mr. president, i a senator: mr. president? the presiding officer: the senator from a senator: mr. president, i'd like to ask unanimous consent to speak as if in morning business. the presiding officer: without objection. mr. isakson: mr. president, on the eighth day of november of

Johnny Isakson

3:30:25 to 3:38:05( Edit History Discussion )
Speech By: Johnny Isakson

Johnny Isakson

3:30:44 to 3:31:06( Edit History Discussion )

Johnny Isakson: this year, i along with senator hagan of north carolina, the senator from louisiana, sent a letter to chairman bernanke, chairman blair, mary shapiro at the f.c., mr. demarko at the federal housing agency and secretary donvan at h.u.d.,

Johnny Isakson

3:31:07 to 3:31:27( Edit History Discussion )

Johnny Isakson: asking them to look at the 941-b requirements at the todd -- of the dodd bill and asked them to complete their work through the amendment the three of us sponsored to create the exception for risk retention requirements by the definition of a qualified mortgage. and i rise today on one of the final days we're here together in congress to raise the

Johnny Isakson

3:31:28 to 3:31:48( Edit History Discussion )

Johnny Isakson: importance of this issue, because the current fragile condition of the housing. pass the national reform bill. mr. president, rain a business for 22 years in residential housing in atlanta.

Johnny Isakson

3:31:49 to 3:32:09( Edit History Discussion )

Johnny Isakson: during those 22 years the average default rate or -- or delinquent rate was 3% on all mortgages, foreclosures rates were less than 1 1/2. things have changed dramatically in the last few years because of sloppy underwriting, because of no credit, because of no documentation. and we've seen some unbelievable

Johnny Isakson

3:32:10 to 3:32:31( Edit History Discussion )

Johnny Isakson: new numbers. according to the fdic the total mortgage delinquencies was 10%. in my state of georgia it exceed 12%. the 100% f.h.a. mart the delinquency is 13%. in my state of georgia in the

Johnny Isakson

3:32:32 to 3:32:52( Edit History Discussion )

Johnny Isakson: third-quarter it rose above 20%. one in every five. we have mounting problems with greenhouse gas housing inventory, problems made worse with growing fees keeping many from being able to refinance affordable loans and therefore becoming delinquent and foreclosed loans. i am, however, extremely proud

Johnny Isakson

3:32:53 to 3:33:14( Edit History Discussion )

Johnny Isakson: of the bipartisan provision that senator hagan, senator landrieu and myself added to the financial reform bill. earlier this year i began working with senators landrieu and hagan to develop the concept of a qualified residential mortgage or as i call it a new gold standard for residential mortgages, which ultimately was included in the credit risk

Johnny Isakson

3:33:15 to 3:33:36( Edit History Discussion )

Johnny Isakson: retention title of 941-b in the financial reform bill. while risk retention can serve as a strong deterrent through excessive risk taken by lenders, it also opposes the potential of a restriction of credit in the mortgage market. i want to make this point quite clear, the risk retention provision of the dodd bill would

Johnny Isakson

3:33:37 to 3:33:57( Edit History Discussion )

Johnny Isakson: require the originator of a residential mortgage to retain 5% of that mortgage as risk retention. tier 1 capital requirements by the banking system is only 8% for the solid the footing of the entire bank, we're going to add 5% to it. very few mortgages will be made and those that are made will be the most pristine mortgages.

Johnny Isakson

3:33:58 to 3:34:18( Edit History Discussion )

Johnny Isakson: not necessarily those that meet the needs of middle america. likewise our standard makes some venture lending practices can never become a qualified residential mortgages. we specifically delineated in the amendment the things like no-doc loans, drive-by appraisals, interest-only loans,

Johnny Isakson

3:34:19 to 3:34:39( Edit History Discussion )

Johnny Isakson: huge prepayment penalties would never be considered a qualified mortgage. against those loans you should require risk retention and additional security on part of the lender. but in terms of mainstream america, we need to go back to the good old days of the 1960's, 1970's, 1980's, if you get a

Johnny Isakson

3:34:40 to 3:35:00( Edit History Discussion )

Johnny Isakson: residential mortgage, you had to get a letter from the boss about your job, your credit report had to demonstrate that you had good credit and would make payment on the installment type of mortgage, the appraiser had to use legitimate information to appraise the house and the underwriters had to match your debt against your income to ensure that you're not too high a risk.

Johnny Isakson

3:35:01 to 3:35:21( Edit History Discussion )

Johnny Isakson: that's why in those wonderful days we only had 1.5% foirs. -- fora closures. the easy underwriting that started in 2006 caused us lots of problems. i'm optimistic that our amendment will be the first step to correct the lending practices of the past and set us on a

Johnny Isakson

3:35:22 to 3:35:43( Edit History Discussion )

Johnny Isakson: better path for the future. in the law we instructed the regulators to use specific criteria in conjunction with loan performances data to define the contours of the mortgage exemption. as we said in our november 8 letter to the regulators responsible for writing the rules and i -- quote -- "it was

Johnny Isakson

3:35:44 to 3:36:05( Edit History Discussion )

Johnny Isakson: our clear legislative intent that underwriting and product features that data dictate a lower risk default must be considered prior to sponsoring the amendment we were provided an analysis that demonstrated that loans that satisfy the elements set out in our element default less and cause far less problems than riskier loans do.

Johnny Isakson

3:36:06 to 3:36:26( Edit History Discussion )

Johnny Isakson: we understand that each of your agencies have been providedded with the analysis, update to reflect loan performance in 2010. this demonstrates that historically tested standards including a documentation of borrowed incomes an assets, restrictions on riskier loan features such as balloon

Johnny Isakson

3:36:27 to 3:36:47( Edit History Discussion )

Johnny Isakson: payments significantly reduce the default rate. in addition for loans with lower downpayments that have -- have a combined loan to value ratio higher than 80%, requiring mortgage guarantee insurance to ensure the lender of protection on the debt with contributes to less default and less problems. i'm aware of these agencies are

Johnny Isakson

3:36:48 to 3:37:08( Edit History Discussion )

Johnny Isakson: actively engaged in meeting and i received correspond from the regulators to assure that they will implement the qmr legislation, in a manner consistent with the language and purpose of that section. it is my hope that the regulators will follow the intent of the legislation by by ensuring a broad spectrum of qualified borrowers fall under

Johnny Isakson

3:37:09 to 3:37:29( Edit History Discussion )

Johnny Isakson: the umbrella under the protection on the qualified safety and soundness provision. i look forward to continue to work with my colleagues on the other side in the new congress to improve our system of housing finance. it is with great anticipation that we await the administration plans to do with a freddie and fannie. i have my own ideas in this

Johnny Isakson

3:37:30 to 3:37:51( Edit History Discussion )

Johnny Isakson: regard which i have expressed on this floor. i look forward to working with tim johnson and richard shelby in the months ahead. the crisis we experienced in large foreclosures and defaults, declines in housing values will only be cured in time when we return to a strong and vibrant lending market where qualified

Johnny Isakson

3:37:52 to 3:38:06( Edit History Discussion )

Johnny Isakson: loans and qualified borrowers come together to fuel the housing market once again. for until this happens, i fear the recession and the recovery that we're in will be protracted and will be slow and the american dream will still be out of the reach of too many

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