Madam President, I come to the floor this afternoon to talk about the housing market crisis. I am grateful for the bipartisan work of Majority Leader Reid, Republican Leader McConnell, and Senators Dodd and Shelby. I am hopeful that we can finally pass legislation that gives our neighborhoods and middle-class families solutions to address the subprime and foreclosure crisis that has already been affecting the economy not only in my State but across the country.

For the past year and a half, we have been hearing all about this subprime mortgage crisis. I think many people not facing foreclosure--and that is most of us--have had this view: It doesn't affect me. I pay my mortgage. I don't have a subprime or adjustable rate mortgage, and I am dealing with a responsible mortgage lender.

The truth is that none of us can escape the impact any longer. The housing crisis is now affecting every homeowner in the country and every would-be homeowner. It is dragging down our entire overall economy. It is not just in the urban areas. In our State, the foreclosure rate has doubled in the rural areas and, in fact, the two counties with the highest foreclosure rates are suburban counties bordering a rural area.

I am a member of the Joint Economic Committee, and just this morning Federal Reserve Chairman Ben Bernanke testified before our committee about the state of the economy, the state of housing, about our financial markets, and about what happened with Bear Stearns. He testified this morning that the housing market is at the root of our housing crisis, and until Congress addresses this crisis, our economy will not be on sure footing.

In January, with record speed, Congress enacted an immediate and temporary fiscal stimulus package. Americans will start getting their checks in just a few weeks. We have to have solutions in this country to our economic troubles that go far beyond the day that these rebate checks are sent. I believe we have to have a long-term energy plan, and we need to put into place a health care plan that makes health care more affordable and more fiscally responsible.

Since then, it has become very clear that this stimulus package will not be enough to address the deep-seated problems that have been developing over several years in our housing and financial markets.

Home ownership has always been considered a basic part of the American dream. But in the last few years, the "dream'' has changed in ways that our parents would not even recognize.

A decade ago, just 5 percent of mortgage loan originations were subprime--meaning that they were made to borrowers who would not qualify for regular mortgages. By 2005, it was 20 percent of the mortgages that were subprime. This opened the dream of home ownership to millions of people but also greatly increased the risk to our system. In Minnesota, in 2000, there were 8,347 subprime mortgages issued. By 2005, it had increased more than fivefold to more than 47,000 subprime mortgages.

In addition, adjustable rate mortgages now make up a much larger share of the market than they did 10 years ago. Many people took out these loans during a period of low interest rates. But when interest rates went up, their mortgage payments adjusted upward and they found they were unable to make their monthly payments. We met some of these people in Minnesota, people who had looked for a mortgage and, because home values were so high, got a subprime mortgage, understood that the rate would go up but were under the misimpression that, in fact, there was a cap or that it would go up a few hundred dollars, and they saw, in fact, in some cases a doubling of their mortgage payments. As a result, we have had a wave of home a foreclosure that started in 2006 and continues today. During 2007, nearly 1.3 million homes became subject to foreclosure--a huge increase from 2005.

What started as a foreclosure crisis is now having ripple effects--or more like a tsunami wave--across the entire economy. It is no longer just a foreclosure crisis. It is a housing market crisis, it is a credit crisis, and it is an economic crisis. It affects everyone who wants to borrow money, whether it is for a house, a car, a college education, or a small business. It affects you even if you make your mortgage payment on time every month and even if you have already paid off your mortgage.

The rise in delinquencies and foreclosures--coupled with the credit squeeze that has made it harder for many buyers to obtain a mortgage--has resulted in an excess of houses on the market, and that has, in turn, depressed home prices. Just last week, a report showed that home prices in the Twin Cities of Minnesota have fallen by nearly 11 percent in the last year--one of the sharpest drops in the country.

Last fall, the Joint Economic Committee issued a report on the housing crisis and its impact on the broader economy. The findings are troubling. The report estimates that, by 2009, 2 million foreclosures will occur; $71 billion in housing wealth will be directly destroyed because a foreclosure reduces the value of the house and the value of the homes around it; another $32 billion in housing wealth for other homeowners will be destroyed because each foreclosure brings down the price of houses generally. The most poignant example of this would be a year or so ago in some of our urban neighborhoods where you started seeing foreclosures, and you would see a sign and people may not want to move into those neighborhoods. Now we are seeing it statewide, and we are seeing the effect it has on reducing home values in general. State and local governments will lose more than $917 billionin property tax revenue because of lower home values.

By one estimate, 10 percent of all homeowners--or 8.8 million people--have a mortgage that is at least as much or more than their home is currently worth; that is, 10 percent of all homeowners have a mortgage that is worth at least as much or more than their home is currently worth. If home values were to fall 20 percent from their peak, even more--13.3 million--would be living in homes worth less than their mortgages. For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity that homeowners have built up--with home equity slipping below 48 percent in the fourth quarter of 2007.

But you don't have a read a congressional report or go  to our hearing and sit through the testimony to see how this ripple effect is touching everyday consumers. Last Tuesday, the Conference Board, a business research group, reported that consumer confidence fell to the lowest level in 5 years--just before the Iraq invasion. In the past couple of weeks, many Minnesotans just got their annual county property tax statements, and they were shocked to see that even the county values their homes at thousands of dollars less than last year.

You might think all of this would be good for first-time home buyers, that they would be a beneficiary because the amount of money and the values are going down. But many of these first-time home buyers, who may not have much credit themselves or much money in the bank, find that just as some bargains are coming on the market, the banks are raising rates and tightening their lending standards, making it harder and harder for ordinary families to qualify for a loan.

We don't have to sit on the sidelines and watch as this housing crisis eats away at our finances and paralyzes our economy. We need to take steps to help homeowners and home buyers, and we can. I hope this is done on a bipartisan basis.

I had a reporter run after me, saying: Majority Leader Reid just said we are going to work together on this--Democrats and Republicans.

I said: It is true. We want to get it done.

He said: OK. Thank you.

I think people are surprised that when we have an enormous crisis like this, Congress must work together to get things done.

What do we need to do? First, we need to give first-time home buyers a fighting chance to get into the housing market--and create some demand.

I have cosponsored the First-Time Homebuyers' Tax Credit Act. Other cosponsors are Debbie Stabenow, Joe Lieberman, and Gordon Smith. I thank Senator Stabenow for her great leadership on this bill and this issue. In fact, before I was even in the Senate, I called her to get some good ideas for first-time home buyers because I was hearing all over our State that because of the value of homes, it was getting harder for first-time home buyers to get a tax credit.

We have a State fair, as the Presiding Officer has in Missouri, and our booth was a home. We designed it like a house and talked about how important it was for Senator Stabenow's idea--for a first-time home buyers' tax credit. 

This bipartisan legislation would create a tax credit of $3,000 for individuals and $6,000 for married couples, if they have qualifying incomes, to help make a downpayment on a first house. We estimate that this credit would help more than 15 million people close the deal on their first home over the next 7 years.

Second, we need to expand financing opportunities for homeowners caught in the credit squeeze.

I am hoping the Senate is able to finally pass legislation that gives State and local housing finance agencies the ability to issue bonds to raise money to refinance subprime mortgages that are in trouble and to expand the ability of the Federal Housing Administration to help homeowners rework their mortgages--rework that many lenders are unwilling or unable to do because of the broader economic crisis.
Third, we need to make sure the foreclosure wave doesn't catch even more consumers who got into mortgages they didn't understand and should not have signed.

I was thinking today at our hearing, when Senator Kennedy was speaking, that we have seen broken Government across this economy because of, in fact, the decision by this administration and others not to watch what was going on, not to put the resources into things--whether it is toxic toys or tainted dog food. Well, these faulty and false and fraudulent financial offerings are a piece of this as well. By really being off the job and not watching over things and not seeing this crisis, we got to the point where we are.

Now we know where we are. We know we have to work with the financial industry, but we also have to look, as we talked about today, at changes in our regulatory agencies for more oversight, particularly changes for these financial offerings. We need to provide the resources for pre-foreclosure counseling so that homeowners do not get into a financial crisis in the first place.

We need to improve and simplify disclosure in mortgage documents. Anyone who signs a mortgage remembers how thick they are. Luckily, when I signed my first mortgage at home before I got married--I still remember sitting at that table trying to figure it out--I went through a good mortgage loan person and someone I trusted, and I got a regular mortgage. So many people do not understand what they are signing. They know they have a teaser rate, but they think it will only go up a little. So why can we not have a 1- or 2-page summary that at least explains how high it can go, what the cap is, what they will be facing in their monthly payments if certain changes are made.
We also have to have some skin in the game for these lenders. They should be held to the same fiduciary duty as banks. The banks have long been advocating for this so we can make sure the homeowners are able to pay the mortgage, not just the first year but in the years down the road.

The truth is these lending documents have gotten so complicated with new gimmicks and provisions that no one can understand them and certainly not a young family just coming on the market.

We must work together if we are going to turn around the housing market and our economy. Together, we can bring some stability to our market. We can make the market work more effectively for homeowners and home buyers and put a more solid foundation under our shaky economy. This is going to take more than just looking at this housing crisis. It obviously is going to take more fiscal responsibility with Government, something I know the Presiding Officer has focused on very much, and I have. It is going to take talking about how we pay for things. It is going to take better regulation of these financial markets.

As Chairman Bernanke said today, in fact, this subprime crisis is at the root of the problem, and that is what we need to focus on this week. Home ownership is at the center of the American dream. 

In the last couple of years, it has become a nightmare, or at least a troubled dream for way too many middle-class families. We cannot sit idly by or, worse, become paralyzed by the size of the problem. It is now time to act.

I yield the floor, and I suggest the absence of a quorum.