WASHINGTON
Senators will discuss on Thursday ways to stem mortgage defaults that have hobbled Wall Street banks, sent stock indexes plummeting and caused thousands of Americans to lose their homes.
The Senate Banking Committee's 10 a.m. hearing on foreclosure prevention efforts comes amid intensified worries about the housing crisis. With nearly 2 million mortgages made to subprime borrowers with poor credit scheduled to jump up to much higher interest rates over the next two years, policymakers are increasingly concerned about the impact on the economy.
The committee's chairman, Sen. Christopher Dodd, D-Conn. earlier this month proposed a new federal corporation -- funded with up to $20 billion -- to purchase distressed loans and help struggling homeowners to refinance. About 1.3 million U.S. homes received foreclosure-related warnings last year, up 79 percent from a year earlier, Irvine, Calif.-based RealtyTrac Inc. said Tuesday.
A coalition of lenders, investors and nonprofit groups -- dubbed Hope Now --was created by the Bush administration in October to help homeowners avoid foreclosure.
But an analysis released Monday by the Center for Responsible Lending, a consumer group, said a Bush administration's plan for a five-year freeze on initial interest rates will prevent foreclosure for only 3 percent of all subprime adjustable rate loans, or 118,200 households. The mortgage industry criticized the study, saying it ignored borrowers who will refinance their loans before they reset to higher rates.
Scheduled to speak at the hearing are: Sheila Bair, chairman of the Federal Deposit Insurance Corp., Michael Barr, a senior fellow Center for American Progress, Alex Pollock, a fellow at the American Enterprise Institute, Wade Henderson, chief executive of the Leadership Conference on Civil Rights and Doris Koo, chief executive of Columbia, Md.-based affordable housing investor Enterprise Community Partners, Inc.
Link:
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