Economy
IN DEPTH: Press Releases
Subprime Lending
We are in the midst of a serious national crisis in the housing market—particularly where subprime mortgages, which are geared toward borrowers with low credit scores, are concerned. There has been an explosion in the subprime industry over the past five years, with the number of subprime mortgages jumping from 8 percent of the total mortgage market to approximately 20 percent of the market today.
Subprime loans are not inherently dangerous, but in the wake this surge in subprime mortgages, predatory practices within the industry have started turning the American Dream of home ownership into a nightmare. Every day, hardworking families are forced into homelessness due to abuse within the subprime mortgage industry—being robbed not only of their money, but also of their hopes and dreams. These abusive practices have caused an alarming increase in foreclosures. There are 1.4 million families who have already lost their homes to foreclosure this year, and another 2.2 million are at risk.
Sadly, the great State of Maryland is not immune to this crisis. In the 7th Congressional District alone, foreclosures have increased by nearly 600% in the past two years. Statewide, the number of foreclosures increased by more than 400% in the third quarter, compared to the first. In the past year, we dropped from ranking 40th in the country for foreclosures to 22nd. This is not a list on which we want to be number 1.
Although this issue has only recently begun making headlines, I have been pushing for reform since a problem began emerging through my position on the Joint Economic Committee. Over the summer, I wrote a letter to Federal Reserve Chairman Ben Bernanke urging him to exercise the Fed’s authority under the Home Ownership Protection Act and begin to better regulate the industry. Shortly thereafter, he and the Federal Reserve issued guidelines to lenders that encompassed many of the ideals outlined in my letter.
Additionally, I introduced H.Res. 526 to support responsible lending practices, which was passed by the House of Representatives over the summer. I am the co-sponsor of two important pieces of legislation passed in the House. The first, the Expanding American Home Ownership Act of 2007 (H.R. 1852), will revitalizing the Federal Housing Administration, allowing it to expand the services it offers to borrowers—including those who are forced to take out subprime loans. The Mortgage Reform and Anti-Predatory Lending Act (H.R. 3915), will protect potential homeowners from abusive practices within the mortgage lending industry, restoring integrity and giving hardworking families the ability to seek redress.
The subprime lending crisis and its subsequent effects on our overall economy is a very complex problem that requires an equally complex solution. I will continue to push for these common sense proposals to aggressively address the crisis that is destroying our economy as hardworking families helplessly stand by and watch their dreams crumble around them. We must come together to address this issue from all angles.
