The committee will come to order. And let me welcome

our witness and congratulate you again, Secretary Donovan, for your

confirmation and...

Thank you very, very much. And I will now ask my

colleagues -- Senator Menendez, any opening comment?

Thank you, Senator, very much.

Former secretary of Housing and Urban Development.

I thank you, very much Senator. And I'm glad the

senator mentioned it, I realized I didn't so myself, but I want to

thank him for him amendment...

Thank you, Senator Brown.

Secretary Donovan, welcome. We are all delighted that you are in

the leadership of the Department of Housing and...

You want to --

Okay.

See I'm relying on the wisdom and the counsel of the former

chairman.

So that shows at least --

I get the gavel. But he's got the wisdom and the

experience. So I will -- Mr. Secretary, will you give your statement

please.

Well, thank you very much, Mr. Secretary.

I note we've been joined by Senator Johanns. And we've been

asking if you have opening statements.

Very good.

In that case I will begin a quick round of questioning -- but,

let me just do this, because we have to vote. I'll recognize Senator

Johanns...

Thank you, Senator Johanns.

Thank you Senator very much.

Senator Merkley, I know you didn't get the chance to make an

opening comment at all so why don't you take the...

I understand Mr. Secretary that Senator Merkeley has

a -- we talked a little bit yesterday as well privately and has as all

of us do --...

So the windows are not terribly wide for people to

step through. And I think it's critically important that the very

people we're trying...

Well I would hope in that regard -- obviously we're

all of our offices are prepared to try and answer what we can and

certainly yours would...

-- with the people who can then actually deliver or

answer their questions very directly.

And I think it's one of those...

There would appear to be obvious benefits to the

principal reduction in that it would allow people to start to

accumulate equity back in...

Okay, I'm going to come back. I wanted to ask you in

the next round I have about the HOPE for Homeowners and what steps do

you think --...

Thank you very much, Senator.

Senator -- who came in first? Senator Menendez, I guess, was

here before Senator (Bayh ?).

Thank you very much. Senator Merkley, and then I'll

come back to you.

Thank you -- Evan, do you need to -- (off

mike). Okay. Secretary Donovan, I've been arriving and leaving

constantly so I thank you for keeping...

Thank you very much. There's another issue and this

is part of the not directly related to housing but part of the current

crisis. There...

Thank you.

One final point because I have a few minutes and the Chairman has

pointed out and my colleagues have echoed a need to communicate...

I think the point has to be made over and over again

because frankly people, you know, they're struggling and they're doing

their best and...

Thank you.

Thank you Mr. Chairman. Secretary thank you for your

service.

I think your energy and your confidence will bring a

breath of fresh air to the Department at a time when the country needs

it, So thank...

I'm highly impressed.

You have a well-paid secretary Mr. Chairman.

Thank you. I'm very impressed. If you would let us

know as soon as the letter's complete, I'm sure the people of Elkhart

would be very gratified...

You know, they are very desirous, as are people

outside of Gary in that part of our state, they have hundreds of

derelict homes, it's keeping...

Well, it's such a concentrated problem that it really

would pay huge dividends. So I thank you for your cooperation on

that. I've got 22...

Here's my question. I hear from people all the time

who say, look, I did the write thing, I've lived my life prudently,

I've saved my money....

Thank you, Mr. Chairman.

Thank you, Mr. Chairman. Thank

you. And I think, as you know, because you're so on top of all these

issues, as America gets to know Shaun...

Very excited that he's the chair of the DSCC.

(Laughter.)

I think the public has this view that the

servicers are little entrepreneurs all over the lot. What percentage

of the servicers come from...

And you have a little leverage over them, I would

say.

So this means that right now two thirds of the

servicers are likely to go along with this plan for those mortgages

that meet the guidelines...

But if it goes to two thirds shouldn't that be a

real change in the housing markets and rates of foreclosure? And

even, shouldn't it help...

Yeah, and Mr. Chairman, I think most of the big

banks that have already received TARP money, who are servicers have

agreed to be part of...

Yeah. So you've got them. I mean, the

Citigroups, and the JP Morgans and the Wells', and all of them. And

they are the servicers. That's...

One final question, when should we start seeing

the results that this guidance will -- the effect it will have on the

servicers?

And that's going to mean some real stuff to the

stability of the banks and of the whole financial markets because

they're still holding...

Senator Warner.

Because you missed your opening statement and so take

a little more time, yeah.

Don't press your luck. (Laughter)

Thank you.

Before I turn to Senator Bennet and Senator Akaka, can I raise

just -- (inaudible) -- take advantage of Senator Warner's question?

This...

Are we giving the lender, in effect, veto power over

all of that? That's, I guess, the --

I appreciate that. And obviously a lot of members on

this side of the dais are very interested in how this moves forward,

so we'd love to...

No, that's fine.

But that's in your first -- the homeowner stability

program, I thought, was the one that had the cap of the 105.

So those folks can be at 150 --

And that is the program where we're going to try to

-- (inaudible) -- and modify and buy down to 31

percent of income.

Mr. Secretary --

Senator Shelby has -- it's the same question. I

apologize to my colleagues --

Right. And if we're going to do this, we've got

to --

-- not just create this whole new --

-- legal pile of trouble. And I also think you've

got the issue, even on the first mortgage, if it has been securitized

and chopped up so...

Right, which is --

Thank you, Mr. Chairman. I

appreciate it. And I apologize for coming in on the tail end, so I

will be --

Well, I'll be very brief.

I first wanted to come because I always like to see a local

government guy make good. (Laughter.) So congratulations,...

Thank you, Mr. Chairman.

Thank you very much, Mr. Chairman.

Let me add my welcome to Secretary Donovan to this committee

again. I remember your lovely family when...

-- and look forward to continuing to work with you.

Let me be more focused on my concern in my question, and that is

implementing housing...

Well, thank you for that, Secretary. I appreciated

your comments on that.

Let me then point to some loans on VA. In addition to sitting...

Well, I appreciated your thoughtful comments again

about this.

And during your nomination hearing, the need to incorporate

education...

Thank you. Thank you very much for your excellent

responses.

Mr. Chairman, thank you.

Thank you very much, Mr. Chair.

And Secretary Donovan, thank you so much for your testimony.

Your thorough knowledge of the topic and the...

I wanted to put in one request with you, as you go

forward, and that is in regard to the hotline that is being set up or

has been set up,...

Thank you so much.

Let me echo those words as well, Secretary Donovan.

It's been very impressive this morning.

And on the Hope for Homeowners, I know you're...

Mm hmm.

And a lot of interest in the subject matter today.

This is no longer just an east coast-west coast thing. But now, you

know, places like...

And Alabama. But the concentrations in urban areas

-- a great trivia question is: which is the most urbanized state in

America? And people...

We've got to move on that.

Thanks very much for being with us.

The committee will stand will adjourned.