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The mortgage foreclosure crisis is in full swing and not looking to let up anytime soon and as the larger mortgage lenders continue to report their highest foreclosure and delinquency rates in five years, these rising default rates have not only affected those in the subprime market but higher mortgage rates are putting a squeeze on borrowers with good credit. As these foreclosure rates continue to skyrocket, and the greater Atlanta area continues to experience high foreclosure rates, I believe the mortgage reform bill the House of Representatives recently passed will go a long way in ensuring the current housing crisis does not occur again in the future.

H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act, will for the first time create a new licensing structure for mortgage bankers to ensure they are licensed and held accountable for the quality of the loans they originate and will also create a new minimum standard for mortgages with protections to ensure all loans are properly underwritten. This provision will also ease the way for high quality or “qualified mortgages” to be securitized as this is especially important because it will ensure continued liquidity in the mortgage securities market. However, I want to emphasize that we are focusing on the bad actors, not those originators who are playing by the rules. Addressing reckless loan underwriting, abusive subprime prepayment penalties and anti-steering provisions are all very important aspects of the bill.

As a member of the House Financial Services Committee, I have continued to work with my colleagues on financial literacy issues, and I was pleased H.R. 3915 included important financial counseling provisions, as well. The bill would create an Office of Housing Counseling which will be established within HUD to conduct activities relating to home ownership and rental housing counseling. I want to ensure there are adequate resources for people caught in the middle who, in many instances, were victims of predatory lending practices. I have further introduced legislation H.R. 3133, the Financial Literacy for Homeowners Act, which would provide grants to states and non-profit agencies to educate consumers on the advisability of a particular mortgage loan and would provide a provision which would create a national toll-free number where consumers can report cases of abuse. I believe it is of utmost importance to provide consumers with education and informative programs about lending laws, counseling and referral services.

I remain concerned regarding the inordinate percentage of minority families tied up in this terrible situation and the facts are disturbing at best as black and Hispanic individuals have disproportionately borrowed in this high cost subprime market. In Georgia’s 13th Congressional district, certain neighborhoods with an inordinate number of foreclosures have become magnets for crime. Is this not a matter of protecting our neighborhoods? And, should we not also focus on the high social costs involved with this crisis, as schools can expect to receive less funding as home values and property taxes fall?

The facts are that 40% of loans originated in the 13th District during 2005-2006 were subprime, one in six subprime loans in the district will ultimately end in foreclosure and subprime foreclosures will result in price declines for more than 118,000 surrounding homes, which will result in homeowners losing $158 million in equity. With this legislation Americans will be protected against predatory lenders, consumers will be ensured of acquiring good loans, credit availability will be preserved, lender and consumer interests will be aligned, consumers will get a simple, understandable and meaningful disclosure of their loans terms and mortgage originators will no longer have incentives to steer consumers into bad loans. To me, all involved should get behind this strong and comprehensive legislation as it is time to do something about this housing mess for not only our economy but those specifically affected, millions of Americans. 

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