The Oversight Subcommittee on Domestic Policy has just concluded a hearing to take an in-depth look at the predatory mortgages, payday loans, and foreclosures that plague inner-city America. This will be the first in a series of hearings Subcommittee Chairman Dennis Kucinich (OH-10) plans to hold looking at various issues afflicting urban America.
The riskiest segment of the U.S. mortgage market, which serves borrowers with poor credit histories at high interest rates, has seen rising default rates in recent months amid falling prices and slower sales in the housing market. On Tuesday, March 13, the Dow Jones Industrial Average dropped 242.66 points, its second largest single day decline in four years, because of the subprime mortgage market. The Mortgage Bankers Association reported new foreclosures surged to an all-time high in the last quarter of 2006.
Watch opening statements from Subcommittee Chairman Dennis Kucinich and James Rokakis, Treasurer for Cuyahoga County, Ohio:
“The Center for Responsible Lending projects that one out of five sub-prime mortgages originated during the past two years will end in foreclosure. These foreclosures will cost homeowners as much as $164 billion. The exact cost it will have on urban America is unknown. I wonder if any of us in government has a proper understanding of the dimensions of the forthcoming foreclosure crisis…”
“When the industry testifies for this panel, please ask yourself one question: why are we here to address what’s become a national crisis? They’ll blame the foreclosure disasters on a slow economy, on rising unemployment, or on rogue brokers and bankers who have misbehaved, and they’ll tell you we have enough laws and regulations, we just need to do a better job of enforcing the ones we have. Ask them if lax or non-existent underwriting standards haven’t played a role in this disaster?”