Fair Disclosure For Homeowners

Thank you, Mr. Chairman. First of all, I would like to commend the Chairman of the Financial Services Committee for his extraordinary leadership and hard work on this legislation. I also want to thank the Ranking Member, Mr. Bachus, along with Mr. Frank, for their extraordinary hard work. and extend my thanks to Mr. Miller, the sponsor of this bill as well.

Today I rise to offer an amendment to H.R. 3915 that I believe will take an important step in preventing avoidable foreclosures.

The news stories we see every day remind us that this subprime mortgage crisis is not going away immediately. In fact, it's getting worse.

RealtyTrac just released its third quarter foreclosure numbers and the numbers are staggering. Foreclosure filings increased 30% nationally from the second quarter which translate to one foreclosure filing for every 196 American households. Two of the largest metro areas in my district are among the 15 with the highest foreclosure rates nationally. Foreclosures in the Cleveland area are up 179% from last year. One in every 57 homes in that area is in foreclosure. In Akron it's every one of every 76. These are families in my district who are suffering.

Many of the loans involved in the current subprime mortgage crisis are hybrid adjustable-rate mortgages. Although those loans typically begin with a low fixed teaser rate, it resets after two or three years often to as much as two or three times the payment. According to a survey, one in four home owners with adjustable rate mortgages were not aware how soon their rates could spike and three quarters didn't know how much their payments might increase. A homeowner who does not know what's coming may not be able to ask for help until it's too late.

The amendment I'm offering today would take a simple step to help ensure homeowners have the opportunity pursue all of the options available to them before the foreclosure becomes inevitable. My amendment, which is based on the recommendations of the Ohio Foreclosure Prevention Task Force, will require lenders to send a letter to homeowners six months before their interest rates are due to reset. The notice will contain four key pieces of information. It will include the new interest rate and an explanation of how it would be determined. Second, it will require the lender to include a good faith estimate of the monthly payment that will apply after the loan resets. Third, it contains a list of alternatives that a consumer may pursue before the date of the adjustment or reset, if they feel they will have difficulty in meeting the payment obligations. And finally, it will include the contact information at the local H.U.D.-approved housing counseling agencies as well as the state housing finance authority for the state in which the consumer resides.

Enhanced disclosures will help prevent avoidable foreclosures. I believe this disclosure is a vital tool for our families.

I urge a yes vote. I yield.

Mr. Frank: She has been very diligent and called to the attention of the committee some of the concerns of the Attorney General, with whom she's working, her Ohio colleagues, and I appreciate this particular amendment and also the willingness of the gentlewoman to work with us as we continue to make this a better bill. So I thank the gentlewoman and I hope her amendment is adopted.