WASHINGTON - In light of the growing crisis in the housing industry in the United States and the record number of potential foreclosures anticipated in coming months, today the House Judiciary Committee considered in a legislative markup the Emergency Home Ownership and Mortgage Equity Protection Act of 2007. 

The manager’s amendment to H.R. 3609 would allow bankruptcy judges the capacity to adjust the terms of certain subprime loans as a form of relief for families threatened with foreclosure.  U.S. Representative Artur Davis, an outspoken advocate on issues of housing and fair lending practices since his arrival in Washington, is an original co-sponsor of the bill who strongly supports its goals.

“With close to two million Americans facing the prospect of default on their mortgage payments, it would be irresponsible to leave the solution to this crisis in the exclusive hands of the market,” Davis said.  “This legislation will give bankruptcy judges the tools to correct the effects of these abusive lending practices.”

During today’s session, Congressman Davis noted the risk the mortgage industry passed on by offering subprime or non-traditional mortgages to those who would not qualify for traditional mortgages.  “Literally something for nothing,” Davis said. 

He also noted the abusive practices the industry engaged in by offering subprime loans to families that would normally qualify for traditional loans.  “Approximately 60 percent of subprime loans in 2006 were imposed on homeowners who were entitled to a better deal,” Davis said.

The bill addresses the current troubling statistics with subprime mortgages in the 7th District of Alabama.  According to the Center for Responsible Lending, a fair housing advocacy group based in Washington, DC,:
•    45% of loans originated in the district from 2005-2006 were subprime, and 1 in 6 of those loans will end in foreclosure;

 •    these potential foreclosures will impact the larger community by decreasing property values for another 79,000 surrounding homes at a loss of $75 million in equity for district homeowners.

Details of H.R. 3609 (as amended):