Sen. Charles Schumer, D-N.Y., pushed a plan today urging Congress to fund counseling and outreach programs for homeowners facing foreclosure. The $300 million expenditures he proposed would assist such homeowners with refinancing or negotiating other cooperation with their mortgage lenders.
The legislation would also hold more accountable mortgage brokers and independent lenders to make sure consumers understand the loans they’re borrowing. The proposal makes special mention of so-called subprime loans, mortgages with higher-than-standard interest rates made to consumers with poor credit.
From an LA Times story on the legislation:
“The sub-prime mortgage market has been the Wild West of the mortgage industry for far too long,” the New York Democrat said today, referring to high-cost loans aimed at people with weak credit. … “Our proposal brings the sheriff back in town.”
The Times also included this statistic in its coverage:
In California, there were 11,033 foreclosures during the first three months of 2007, an 800% increase over the previous year.
Controversy swirls in government forums and housing and economics blogs about the idea of taxpayers bailing out beleaguered homeowners, since they voluntarily borrowed the money. But many advocates for consumers and minorities — who are said to have been targeted disproportionately for the high-interest loans — say loan officers deceived some borrowers about the hidden costs of the loans.
“To be clear, no one is getting bailed out,” said a statement by John Taylor, president of the National Community Reinvestment Coalition. “Borrowers will repay their loans, but at interest rates and with fees that are fair and reasonable.”