[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[House]
[Pages 10135-10136]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           PREDATORY LENDING

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from California (Ms. Lee) is recognized for 5 minutes.
  Ms. LEE. Mr. Speaker, first let me just thank the gentleman from 
Maryland (Mr. Cummings) for organizing these 5-minute speeches tonight, 
and for his leadership in fighting for home ownership and opportunity 
and against predatory lending practices.
  As my colleague Congresswoman Jones just said very eloquently, it is 
a real shame and disgrace that we once again have to take to the floor 
to raise the issue of predatory and deceptive lending practices.
  As many of us can attest, which you are hearing tonight once again, 
these practices are out of control and on the rise, and they are 
leaving many, many people out in the cold and in foreclosure.
  The statistics regarding the current subprime lending debacle are 
staggering. It is estimated that bad loans have forced 1.5 million 
homeowners into foreclosure this year alone, according to ACORN. In 
2006, the number of foreclosures stood at 2.6 million, topping the 
prior year total of 900,000 people. The problem is only getting worse.
  The subprime industry's practice of higher rates, teaser rates, 
higher fees, prepayment penalties, payday loans, check cashing 
facilities and other unfavorable and hidden costs combine to create 
conditions that push homeowners into hopelessness. We must remember 
that foreclosures not only devastate individuals and families, but they 
also depress communities and decrease property values.
  This does not have to be the case for many subprime customers. The 
assumption that subprime loans are for people who cannot qualify for a 
prime loan at a good rate is false. Fannie Mae, and this is really 
unbelievable, Fannie Mae and Freddie Mac have assessed that one-third 
to one-half of subprime borrowers could have qualified for better loan 
rates but were not given that option. They just weren't given that 
option. The education and the information were simply not provided to 
these customers, and I wonder why.
  Regulators haven't done enough to protect consumers against predatory 
lending. Because of the Bush administration's lack of regulatory rigor 
and oversight of the subprime mortgage industry and their tendency to 
pander to the business industry at the expense of hardworking middle- 
and low-income Americans, we are in the mess we are in today.
  Sadly, many of the victims of predatory lending are the elderly, 
single parents, and people of color. In fact, communities of color 
continue to be the target of predatory lenders. I call them loan 
sharks. They are all over my community, and these unscrupulous 
financial service schemes prey on the dream of home ownership and the 
prospect for generational wealth building.
  Within the last year, investigations of real estate agents were 
designated by HUD for testing, they uncovered an 87 percent rate of 
racial steering and a 20 percent denial rate for African Americans and 
Latinos.
  A Federal Reserve study showed that African American and Latino 
borrowers are more likely to receive higher cost subprime loans than 
their white counterparts. However, the likelihood of receiving a higher 
cost loan to buy a house than a white borrower for African Americans is 
3.7 times more likely and for Latinos, 2.3 times more likely.
  So we must put an end to this type of lending discrimination and 
predatory practice. Enough is enough.
  Sometimes people ask me what is institutional racism. They do not 
quite get it. Well, let me tell you, this is a very glaring and 
unfortunate clear example of institutional racism, and so we must 
support all of the efforts by Congressman Cummings and other efforts by 
Congressman Mel Watt, Brad

[[Page 10136]]

Miller, Barney Frank, members of the Financial Services Committee to 
put forth legislation that provides a floor, not a ceiling, for a 
policy such as this. We have got to face reality. That means we must 
take a look at these, and I just call them exotic loans, and they are 
exotic, and adjustable rate mortgages that soon become unaffordable, as 
Congresswoman Tubbs Jones said, after a couple of years.
  To entice borrowers to take on risks that they may not be aware of is 
just plain setting them up to fail, and this is just wrong. It is a 
shame. It is a disgrace.
  We need to provide relief, first of all, to victims of these loan 
sharks and protect the national economy from the consequences of a 
mortgage industry crisis which I believe is looming. We must act 
immediately to protect a generation of homeowners. They are counting on 
us. They deserve an opportunity to achieve the American Dream of 
homeownership which is quickly turning into a nightmare for many.
  For the majority of Americans, like for myself, purchasing a home is 
the only way, I mean the only way, you can build any type of equity to 
be able to just send your kids to college or to buy a house or to do 
some of the things that you want to do, start a small business. So we 
have got to clamp down and we have got to clamp down hard on these loan 
sharks.

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