[Congressional Record Volume 153, Number 149 (Wednesday, October 3, 2007)]
[House]
[Page H11230]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page H11230]]
                              {time}  1830
                    ADDRESSING THE SUBPRIME MELTDOWN

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from New York (Mrs. Maloney of New York) is recognized for 
5 minutes.
  Mrs. MALONEY of New York. Mr. Speaker, we are at a critical juncture 
with respect to the subprime mortgage crisis. I see my colleagues here 
on the floor that are members of the Financial Services Committee and 
other important committees that have been working with the Democratic 
leadership and the Democratic Congress to help families stay in their 
homes and prevent another crisis like this from happening in the 
future.
  Today, I joined with House and Senate leaders and colleagues in 
urging the President to join us in aggressively working to turn back 
the tide of foreclosures. Parallels have been drawn between this 
administration's management of the subprime crisis and Hurricane 
Katrina, when some 300,000 people lost their homes. Millions of 
Americans may lose their homes to foreclosure as a result of the 
subprime mortgage meltdown. And once again the response from the Bush 
administration has been slow and small. This crisis requires a bolder 
response. Foreclosures have spiked nearly 115 percent since this time 
last year, and expectations are that the next 18 months will be even 
worse as many subprime loans reset to higher rates. Some economists 
think that the collapse of home prices that we will see might be the 
most severe since the Great Depression. The worsening housing slump, 
the credit crunch, and weak consumer confidence point to a gathering 
storm that could drag down the economy, taking thousands of American 
jobs with it.

  As losses mount for borrowers and lenders, economic pain is already 
being felt in communities across this country as the ripple of default 
spreads to local economies, governments and neighborhoods. The time to 
act is now.
  Under Speaker Pelosi and Chairman Frank's leadership, the House 
swiftly passed legislation that will enable the FHA to serve more 
subprime borrowers at affordable rates and terms, and offer refinancing 
to homeowners struggling to meet their mortgage payments. The President 
should sign that bill the minute it gets to his desk.
  We have passed also important GSE reforms in the House, but we should 
also raise the cap on their portfolio limits at least temporarily so 
that they can provide additional liquidity and help with the subprime 
crisis. If there was ever a time for Fannie Mae and Freddie Mac to have 
more liquidity to help people, it is now.
  The caseloads for nonprofits aiding strapped borrowers are growing 
larger by the day. The Joint Economic Committee, which I am honored to 
serve on, reported earlier this year that it cost $1,500 to prevent a 
foreclosure of a single family home. And that's the first thing that we 
should be doing is keeping people in their home, helping them stay 
there. And that shows what it's like for one family home, only $1,500. 
But foreclosure prevention specialists are absolutely in critical need 
of more resources in order to save more homes.
  Foreclosures have a significant negative impact on entire communities 
because of lower property values, decreased property tax revenues, and 
higher municipal maintenance costs. In fact, we estimate that the total 
cost of each foreclosure to the community can be up to $227,000, as the 
right-hand column shows.
  The impact of these foreclosures will be devastating on African 
American and Hispanic owners, as 52 percent of all mortgage loans sold 
to African Americans and 40 percent of those sold to Latinos were 
subprime over the last 2 years. The sad irony here is that up to 40 
percent of subprime borrowers, they would qualify for prime fixed-rate 
loans. We need to help them renegotiate their loans and get into the 
prime, more affordable loans. Securing additional funds for foreclosure 
prevention is critical to bringing subprime borrowers and lenders 
together to achieve loan workouts.
  For $200 million in Federal Foreclosure Prevention Funding, which 
passed the Senate this month, 130,000 families, let me just show this 
one thing that is happening, Mr. Speaker. For $200 million, we can save 
a lot of people and keep them in their homes, and yet we're spending 
that much in Iraq.
  The sad irony here is that up to 40 percent of subprime borrowers 
would qualify for prime, fixed-rate loans.
  Securing additional funds for foreclosure prevention is critical to 
bringing subprime borrowers and lenders together to achieve loan 
workouts.
  For $200 million in federal foreclosure prevention funding, which 
passed the Senate this months, 130,000 families could be helped to 
avoid foreclosure, as the bar on the left shows.
  That is less than the cost of the Administration's Iraq war spending 
for one day, which is now about $330 million and to rise, as the big 
red bar on the right shows.
  To help the two million households that are at risk of foreclosure 
would cost one week of our spending in Iraq.
  We invite President Bush to join us in our efforts to aggressively 
help protect and expand the American dream of home ownership.
  Mr. Speaker, the price of doing nothing is just too high.

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