[Congressional Record Volume 153, Number 66 (Tuesday, April 24, 2007)]
[House]
[Page H4028]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     PREDATORY LENDING PRACTICES IN THE SUBPRIME MORTGAGE INDUSTRY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Maryland (Mr. Cummings) is recognized for 5 minutes.
  Mr. CUMMINGS. Mr. Speaker, I rise today to express my deep concern 
with regard to predatory lending practices in the subprime mortgage 
industry and to emphasize the need for Congress to act swiftly in 
addressing this critical issue.
  Owning a home is an essential component of the American Dream. Simply 
put, homeownership has the power to transform lives. I still remember 
the day 45 years ago when my family first moved into our own home. I 
was only 10 years old, but I will never forget that momentous event.
  Homeownership changed life for me and my seven brothers and sisters. 
We were able to go to better schools, and our family was able to build 
wealth. Over the years, my parents worked hard to make the mortgage 
payments every month, building equity, and eventually paying it off. My 
mother at 81 still lives in that house, mortgage-free. Because my 
parents invested in their home, my mother can now live out her final 
years in dignity and with a sense of security.
  Every American family deserves the benefits of homeownership that 
transformed my life. That is why I am outraged by reports of predatory 
lending practices in the subprime mortgage industry and the upsurge in 
foreclosures that have occurred as a result thereof.
  The national foreclosure rate has been increasing at an alarming 
rate. According to RealtyTrac, a realty research firm, foreclosures 
increased by 42 percent from 2005 to 2006, to 1.2 million. That 
translates into one foreclosure for every 92 households.
  Much has been made of the impact these foreclosures will have on Wall 
Street. However, I am equally concerned with the impact that they will 
have on the hundreds of thousands of Americans who are losing their 
homes.
  Increasing foreclosures are directly related to the subprime mortgage 
industry, which has grown from less than 8 percent of the total 
mortgage market in 2001 to approximately 20 percent of the market 
today. Subprime mortgages, which target borrowers with low credit 
scores, often cost more than prime mortgages, and include terms that 
allow payments to balloon or grow exponentially over time.
  Predatory lending practices are common in the subprime mortgage 
industry, where borrowers are more likely to either have limited 
options available to them or be unaware of their options. Disturbingly, 
African Americans and Latinos are more likely to get higher rates than 
white borrowers with the same qualifications, and borrowers over the 
age of 65 have five times the odds of receiving a subprime loan than 
younger borrowers.
  This trend is illustrated in the congressional district that I 
represent, the Seventh Congressional District of Maryland.
  If you look at these maps, it is clear. In the map on the left, the 
red indicates the concentration of low-income African American and 
Latino populations. In the map on the right, the red area is the 
highest concentration of subprime loans.
  Note that the two areas are nearly identical, indicating that 
subprime loans in the Seventh District are more likely to be given to 
African Americans and Latinos and lower-income people. This is simply 
unconscionable. Somebody is making big bucks off of vulnerable families 
in my district who are losing their homes. For those of us who remember 
redlining, this is simply more of the same. We must end discrimination 
in lending practices now.
  Mr. Speaker, I want to conclude by urging my colleagues to continue 
to work on this issue. Today I introduced a resolution expressing the 
sense of the Congress that issues related to the subprime market must 
be addressed.
  Specifically, the legislation identifies the following goals for 
reform: strengthening Federal regulations, banning unfair and deceptive 
practices, requiring lenders to establish a borrower's ability to pay, 
increasing the disclosure of alternative mortgage products, reducing or 
eliminating the prepayment penalty, eliminating mandatory arbitration, 
identifying brokers and lenders with high rates of foreclosure, and 
mandating preloan counseling.
  As a member of the Baltimore Home Ownership Preservation Coalition 
and the Joint Economic Committee, I urge all of my colleagues to 
support this resolution and join with our chairman of the Committee on 
Financial Services, the gentleman from Massachusetts (Mr. Frank), in 
addressing this critical issue.
  Finally, I want to thank all of my colleagues who have come to the 
floor this evening to address this issue.

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