Cummings Calls on Bernanke to Do More to Prevent Foreclosures
November 8, 2007
Press Release
Washington, DC—Today, while questioning Federal Reserve Chairman Ben Bernanke at a hearing of the Joint Economic Committee regarding the nation’s economic outlook, Congressman Elijah E. Cummings (D-Md.) heatedly called on him to increase efforts to assist families who are losing their homes due to foreclosures resulting from the subprime mortgage crisis.
“Anyone who walks through my district will see family after hard-working family losing their homes because they were victimized by predatory subprime lenders,” Congressman Cummings said. “I have a difficult time buying the picture of potential economic growth being painted this morning by Chairman Bernanke when I see people who may have lost their only chance in a lifetime at home ownership.”
The effects of the subprime lending crisis are rippling throughout the economy, reflected in everything from the accelerating slump in housing markets across the country to the summer’s global financial crises driven almost entirely by fears about the collapsing subprime mortgage market. While continuing to jeopardize the overall economy, the subprime crisis also continues to drive tens of thousands of families out of their homes and is constricting the flow of credit to millions of Americans.
Approximately 1 in 5 of the subprime loans issued in the past two years is expected to go into default, costing 2.2 million families their homes. Effects have been particularly noticeable in Maryland, which currently ranks 22nd nationally in home foreclosures—compared to last year’s ranking of 40th. Additionally, over the past two years, foreclosures have cost the City of Baltimore approximately $1.8 billion in reduced property value.
The Fed has made some efforts to alleviate the negative effects of the subprime crisis, such as issuing guidelines to be followed by lenders and participating in programs like NeighborWorks America, a nonprofit organization that helps thousands of borrowers who are facing current or potential distress in obtaining assistance from their lenders. Congressman Cummings applauds these measures as a good start, but insists that more needs to be done.
“We have a serious crisis facing millions of families whose American Dream of homeownership is—on a daily basis—turning into an utter nightmare,” Congressman Cummings said. “The Federal Reserve must begin putting pressure on financial institutions to help these families on the brink of foreclosure and work more closely with the states to ensure effective enforcement of the regulations designed to protect consumers. We cannot curtail this crisis without strong efforts to assist the borrowers who are suffering from predatory lending practices.”
Congressman Cummings has been a leader in addressing the subprime lending crisis. He introduced the House resolution (H.Res.526) passed over the summer to support responsible lending practices and has co-sponsored numerous bills to revitalize the housing market and assist at-risk borrowers. He is currently putting together a forum to bring together lenders and borrowers in an effort to assist families in keeping their homes.
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