Passenger Rail Investment And Improvement Act Of 2007
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, I ask unanimous consent to speak as in morning business for up to 10 minutes. Mr. President, today the Joint Economic Committee released…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I ask unanimous consent to speak as in morning business for up to 10 minutes.
Mr. President, today the Joint Economic Committee released a report highlighting the impact of subprime foreclosures on local economies. It confirmed what many of us know: When homes go into foreclosure, it is not just the homeowner and the tragedy to that family; whole communities suffer. When entire neighborhoods fall victim to foreclosures, communities are often devastated.
Today's report shows that in Ohio, there are more than 293,000 outstanding sub-prime loans--293,000 in a State of 11 million people, perhaps 3 million-plus households; 293,000 outstanding subprime loans. Every outstanding loan represents a family, an Ohio family, that is so close to losing their home.
The estimated loss of property value this year in Ohio is more than $3.7 billion. The estimated local tax loss, that is local government revenue all over the State, this year is more than $31 million. That is lost revenue needed to pay for firefighters, for schoolteachers, for police officers, and for rescue squad vehicles and their workers. That lost revenue means poorer service and less service for those communities already suffering from poverty and suffering from the foreclosures themselves.
Two years ago, when Hurricane Katrina's storm surge left thousands homeless, Congress and the American people leapt to respond. We were moved and ashamed by the images we saw in our newspapers and on television. We were moved by the images, and ashamed, frankly, by our Government's lack of response. Most of us could not believe this could happen in our country. Today, we are witnessing the economic equivalent of Katrina in the housing market--a slow moving storm surge that is leaving hundreds of thousands, perhaps millions, of people in this country without a home. They have lost their homes, they have lost their American dream. It started on Lake Erie rather than on Lake Pontchartrain, but it has spread to all corners of our country--from New York to the Presiding Officer's Florida, from California to Minnesota. As today's report shows, subprime lending doesn't just hurt families, it hurts entire communities.
Unfortunately, the response to date in some ways has been worse than Katrina. Regulators have been slow to use their authority to act, Congress has done next to nothing, and the President, as before with Katrina, made a speech and then moved on. The Treasury Department sprang into action when Wall Street was looking at losses, but it has not applied the same energy or commitment to the thousands upon thousands of families in Slavic Village, near Cleveland, in Columbus and Lima, in Mansfield and Marion, or Zanesville. Thousands and thousands of families in those communities are losing their homes.
Whole neighborhoods in Cleveland and Dayton and cities throughout the State are drowning in foreclosures. Things are going to get worse before they get better. We know that, because the adjustable rate mortgages are about to reset day after day, week after week, month after month in our communities. Almost every day the news brings more evidence of how widespread this problem has become for banks--losses in Merrill Lynch, layoffs at Bank of America, and huge layoffs at National City Bank in my State.
Even as National City announces the layoff of 1,000 people in Ohio, in the first 9 months of this year, since January, 100,000 foreclosure filings have already stacked up, with every county in our State contributing to that stack.
Home sales are down, prices are down, and problems are showing up in prime markets. But we have yet to see the worst of it. Resets of subprime adjustable rate mortgages will peak this fall, ease up a bit, and then skyrocket next fall. Throughout the time these mortgages were being made, underwriting standards fell further and further. So on top of the enormous volume of loans resetting over the next 12 to 15 months, the likelihood of all those 2-28 loans made in 2006 defaulting in 2008 is likely to get worse.
We are already in record territory when it comes to this year's loans, but we have made a start in addressing this crisis. The $200 million contained in the housing appropriations bill passed by the Senate must be maintained or increased in the bill sent to the President. And he must sign it. He must do something about this. That would be a major first step to helping those neighborhood organizations, those not-for-profits. There is a terrific one in Toledo, and several in my State and in the State of Florida too. It will matter to those people who are about to lose their homes. They are delinquent in their payments, perhaps because of the reset and a higher mortgage, or because their taxes and insurance were added when they didn't know they weren't included, or when they were simply deceived or betrayed by fraudulent mortgage brokers.
This $200 million is not a bailout. It is only to help them renegotiate their loans so their delinquencies won't turn into foreclosures. And the President, as I said, must sign this bill.
The regulators need to act and act quickly with strong protections for consumers, and Congress must act to codify and build on those protections. Mortgage bankers must be held accountable for their actions. They can no longer sell loans without regard to whether a borrower can afford to pay them back. And banks have to be responsible as well. Underwriting standards have to ensure that borrowers qualify at the real rate rather than the teaser rate. No more of that. Escrows have to be set up for subprime loans, as they are for prime loans, and put money aside for insurance and for taxes. No-document loans need to become a thing of the past.
Just because the subprime crisis is less visible than the destruction of a hurricane, it is no less damaging. All of us need to respond. Our response must be comprehensive and our response needs to happen now.
I yield the floor, and I suggest the absence of a quorum.