[Congressional Record Volume 153, Number 170 (Monday, November 5, 2007)]
[House]
[Pages H12716-H12717]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        SUBPRIME MORTGAGE CRISIS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from New York (Ms. Clarke) is recognized for 5 minutes.
  Ms. CLARKE. Mr. Speaker, I come to the floor this evening feeling 
compelled to speak on an issue that has had an adverse and devastating 
impact in my district and many districts across this Nation. The 
phenomenon known as subprime lending, which has grown so rapidly over 
the past decade or so, has made it possible for many New Yorkers with 
modest incomes and poor credit histories to purchase homes.
  The question is, at what cost? The Federal Government has found that 
subprime loans made up 32 percent of all mortgages in New York City 
last year, which is up from 28 percent in 2005.
  However, an estimated 364,433 subprime loans remain outstanding. As a 
result, as we stand here tonight, Brooklyn has 4,864 homes facing 
foreclosure.
  When certain unscrupulous lenders aggressively and deceptively 
convince vulnerable borrowers seeking relief in their pursuit of the 
American Dream to accept unfair and abusive loan terms, many of these 
same borrowers have, unfortunately, lost their homes, leaving them 
displaced, penniless, and bankrupt.
  Today, mortgage finance programs in the subprime lending industry are 
growing more severe, with soaring loan default even diminishing home 
prices. These defaults have depreciated about $71 billion in housing 
wealth. I must tell you this evening that this crisis will and is 
currently affecting State economies.
  It has been estimated that there will be 1.3 million foreclosures 
from mid-2007 through 2009 in subprime mortgages, resulting in an 
estimated loss of $102.4 million in property taxes.
  Also, it has been reported that the subprime mortgage crisis will 
cost States $917 million in lost property revenue through the end of 
2009 and more than $103 billion in lost property values, including $9.5 
billion for New York.
  What is alarming to me is that there have been reports which have 
found that embedded within this American crisis there appears to be 
real racial disparities when it comes to subprime lending. For example, 
one report stated that blacks and Hispanics are 30 percent more likely 
than whites to be charged with higher interest rates. Additionally, in 
New York, blacks are five times and Hispanics almost four times more 
likely to pay higher interest rates for homes.

[[Page H12717]]

  Even in East Flatbush, Brooklyn, which is located in my district, an 
astounding 44 percent of blacks and Hispanics earning between $40,000 
and $50,000 received their loans from subprime lenders. We must make a 
conscious and focused effort to address the subprime lending crisis in 
predominantly black and Hispanic neighborhoods in New York City and 
across the Nation.
  What is so ironic about this issue of the subprime mortgage crisis is 
that as a former New York City council member, my colleagues and I saw 
this crisis arise as representatives of the municipality. We even 
passed legislation, anti-predatory lending legislation, yet the 
legislation went nowhere due to the threat of litigation by the 
financial services sector. Now the crisis is upon us. Hundreds of 
thousands of Americans across this country are facing this crisis.
  I am supporting and will champion any and all measures that ensure 
that all borrowers, especially those living in underserved communities, 
are no longer hurt by the recent events and tactics occurring in the 
mortgage market.
  It is our responsibility, and in the public interest, to make certain 
that we eliminate predatory practices that have the potential to 
financially harm mortgage consumers living in America.
  If we do not, I believe that we will generate an environment where 
predatory lenders will continue to actively sell high-cost, high-risk 
mortgages in many communities, including underserved communities, 
making the American Dream of all Americans an American nightmare.

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