Pelosi, Reid Urge Bush to Address Mortgage Crisis
Democrats Send Letter to President to Act to Avoid Housing Crisis
Besides Pelosi and Reid, other Democrats signed the letter. Presidential hopeful and Massachusetts Senator Chris Dodd and New York Senator Charles Schumer represented the Senate along with Reid, while Congressman Barney Frank (MA) and Congresswoman Carolyn Maloney (NY) were House co-signers with Pelosi.
The letter begins by reiterating what the crisis entails and the severity of the problem, and points out that, " Already, some previously thriving neighborhoods have become ghost towns plagued by blight and crime." The letter says that the main cause of this growing problem is "the proliferation of high-cost, extremely risky subprime adjustable-rate mortgages (ARMs), which offer short-term teaser rates that explode upwards after the two- or three-year fixed period."
The letter points out some statistics and numbers from outside think tanks and other organizations. The National Consumer Law Center has noted that if the continued trend of foreclosures keeps increasing the number of Americans that will lose their homes will equal the number of people displaced by Hurricane Katrina. Pelosi and Reid also point out that even Secretary of the Treasury Henry Paulson has said that the subprime mortgages were "'bad lending practices'".
The Speaker and Senate Majority Leader urge the President to "take a number of immediate, critical steps." The first of these is to help the Congress pass legislation to modernize Federal Housing Administration in order to increase funds available to homeowners to help in emergency loans for those suffering from abusive mortgages. Also, part of this step would be for the President to lift limits on Government-Sponsored Enterprises that can also make funds available to struggling homeowners.
The second request is to increase funding for non-profit organizations that help homeowners, especially those that are reluctant to contact their service providers. The letter asks that the President support upcoming legislation to enhance and increase the number of these non-governmental organizations, and also asks the President to work with the House and Senate in order to deal with this crisis as it worsens.
As a third request, the letter urges the President to appoint a senior official to oversee and coordinate the federal response to this housing crisis. This person would be in charge of encouraging and working with lenders to modify adjustable-rate mortgages with the intent of keeping people in their homes.
The fact sheet that accompanies the letter to the President includes statistics to further show that this crisis is worsening and must be dealt with on a federal level. Moody's has recently shown that less than 1% of homeowners have received modifications in their mortgages with the intent of keeping those borrowers in their homes, rather than foreclose.
Source: The Office of the Speaker of the House
Published by alex cruden
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1 Comments
Post a CommentSub-prime lending is bad for everybody but as so often in life it hits those who can least well face the crisis the hardest. Lenders have a responsibility to see that the the fiancial product they are selling is firstly fully understood by the borrower but secondly that in their judgement if the markets go against the client foreclosure is unlikely to become an issue. It is not counterproductive to business to so structure their affairs that the rewards of the good times are not destructve to your clients when the going gets tough.
Similarly shareholders must acknowledge that if they invest in a business that lends to lower quality borrowers their stock is at risk of underperforming or at the best producing no dividends. That is risk and should not be removed.
We suffer the same in the UK but it is time the financial community accepted that with lending goes some moral responsibility and most especially when that lending is to those least able to face a financial crisis in the fu