[Congressional Record Volume 153, Number 111 (Thursday, July 12, 2007)]
[Extensions of Remarks]
[Page E1494]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 HOME OWNERSHIP AND RESPONSIBLE LENDING

                                 ______
                                 

                               speech of

                          HON. DANNY K. DAVIS

                              of illinois

                    in the house of representatives

                         Tuesday, July 10, 2007

  Mr. DAVIS of Illinois. Mr. Speaker, I rise today in support of House 
Resolution 526, ``Supporting Ownership and Responsible Lending.'' Home 
ownership plays an integral role helping this Nation's citizens realize 
the American Dream.
  Now more than ever we must increase the awareness of risky loans to 
protect present and future homeowners. Home ownership is a vital part 
of our Nation's economy. It benefits neighborhoods by raising property 
values and providing economic and social capital.
  Nationally, in 2006, a record setting 75,000,000 Americans owned 
homes. In the 7th District of Illinois, there are 238,000 housing 
units. Of those 238,000 units 49 percent are owner occupied and 51 
percent are renter occupied. Fifty-four percent of those who rent spend 
more than 30 percent of their income on housing.
  The housing boom from 2001 to 2006, lower mortgage rates and 
increased liquidity in the secondary mortgage market, all led to the 
growth of sub-prime mortgage industries. These secondary mortgage 
markets created home ownership opportunities for lower income families, 
people with little or no credit histories, and families without any 
access to down payments.
  The downside to these newly formed opportunities would be the birth 
of predatory lending. This occurs when lenders hide the true cost of 
sub-prime loans from unsophisticated borrowers. These unfair 
practitioners are the main reason for the sudden wave of foreclosures. 
Foreclosure, when considering both legal and administrative expenses, 
would cost the borrower an average of $7,200.
  In Chicago alone, due to the predatory lending practices of various 
institutions, the rate of foreclosure on sub-prime loans is 19.2 
percent; this is up 37 percent from approximately 5 years ago. From my 
understanding the property value surrounding the foreclosed home is 
devalued by $30,000.

  This would cause responsible lenders to lose thousand of dollars per 
foreclosure. Another negative aspect of this sudden rise in 
foreclosures is the costly affects that it has on local government 
because abandoned homes cost districts tax revenue.
  By definition the lost that is suffered by the districts will have a 
spiraling effect throughout the community, taking funds from education 
and the economy.
  I commend the Hon. Elijah Cummings for introducing House Resolution 
526, ``Supporting Ownership and Responsible Lending.'' I am a firm 
supporter for enforcing rules that would prevent persons from falling 
victim to unfair practices. By enforcing rules to eliminate unfair 
practices in sub-prime mortgage lending, addressing appraisal and other 
mortgage fraud, and increasing opportunities for loan counseling, we 
will raise the awareness of risky loans and protect present and future 
homeowners.

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