Minnesota Campaign Report's Joe Bodell has an excellent recap of the House Financial Service Committee's Thursday hearing on Predatory Lending, held in Minneapolis.  

From Bodell's post:

Chairman Frank noted in his opening remarks that "foreclosures are not occurring in little houses on the prairie -- they're happening in neighborhoods."  He went on to discuss the issue of the unregulated, non-FDIC mortgage market, saying that "if only regulated banks made mortgage loans, we might not have this problem -- this is largely a problem in the unregulated segment of the mortgage market."

Predatory lending has been all over the news this week, but the MSM seems mostly interested in how the rapidly rising number of foreclosures will affect the market overall.  Not much is being said about the families and individuals who stand to lose their homes.  The committee hearing however focused more on the human element of this probable financial crisis.

Many panelists focused pointed questions on Dick Todd of the Minneapolis Federal Reserve.  Ellison asked whether the Fed has a role in regulating so-called "exotic" mortgage produts, and Todd responded that while the local Fed branch can write rules governing such products, it cannot enforce those rules.

Sharon Glover of Golden Valley told her tale:  she made an accident getting into a refinancing deal in which she extracted no equity, never received loan documentation, and her payments increased drastically twice:  once when her loan was refinanced and again when her loan was sold to another lender, Ocwen.  She said she never missed a payment, but nevertheless was  served with a foreclosure notice.  "I was planning to sell the house anyway because it had become too much for one person, but I hadn't planned to lose everything."  She detailed the predatory practices undertaken by the mortgage lender, who was forced to withdraw the sheriff's sale on her home when her lawyer presented the company with a class action lawsuit.

I'm not a financial analyst so I have no idea if a crash is imminent or what its affects will be on markets worldwide.  What worries me is that the needs of home owners who bought or refinanced into sub-prime loans will get lost in the shuffle.    We can't count on corporate interests concerning themselves with  individual losses, but government at the federal and state level can and should be advocates for those who stand to lose their homes.  

Hillary Clinton released her plan to fight the effects of predatory lending this week and Chris Dodd responded by releasing a time line of his own efforts.  I expect that in 2008 predatory lending will become a key issue for Democratic candidates from the Presidency down to State House seats across the country.  Sub-prime mortgages won't always be front page news but the increase in foreclosures will have long term effects for families and communities.  Voters will be pressing candidates to offer a solution.  
 

According to the Center for Responsible Lending, 2.4 million U.S. homes are projected to foreclose as a result of recent subprime lending. ACORN offices have been taking action to inform homeowners at risk of losing their homes of the options available to them to avert foreclosure. They are also putting pressure on lenders and legislators to place a one-year moratorium on seizures.

A new study released March 26 by Policy Matters Ohio, a nonprofit research group, showed Ohio to be the worst in the nation with regard to home foreclosures. The state's foreclosures were up 25 percent since last year with more than 79,000 homes at risk.

Millions of homeowners who assumed subprime mortgages during the past decade are feeling the pressure, as adjustable interest rates have risen up to 40 percent while incomes have stagnated.

Foreclosure rates are at an all-time high with projected foreclosures estimated at 2.4 million, according to the Center for Responsible Lending.

Sub-prime loans - high interest loans usually made to borrowers with poor credit records - are contributing to 60 percent of foreclosures.