McNerney Pushes for Response to Subprime Mortgage Crisis

September 18, 2007

Washington, D.C. – As Stockton faces the dubious distinction of having the highest foreclosure rate of any U.S. city and California the highest number of foreclosure filings of any state in the country, Congressman Jerry McNerney (CA-11) today worked to address the causes behind the current subprime mortgage crisis.

“The number of home foreclosures in San Joaquin County and throughout California is startling, forcing many families out of their homes and into financial ruin,” said Rep. McNerney.  “Many of those families took out interest-only or adjustable rate mortgages because there was no other option.  This bill takes major steps to address this and ensure that the American Dream is within reach of all Americans.”

The Expanding American Homeownership Act of 2007, H.R. 1852, would ensure mortgage loans for low and middle income families by authorizing zero down payment loans, direct the Department of Housing and Urban Development (HUD) to serve higher risk borrowers who may otherwise turn to predatory and high priced mortgage loan alternatives, and by raising loan limits so that Federal Housing Administration can serve high cost housing markets.

This bill aids those at imminent risk of defaulting on their mortgages by offering refinancing loans to help borrowers – expanding on the Bush Administration’s recent proposal.

It also takes steps to prevent future crises by more than doubling federal funding for housing counseling to help subprime homebuyers who fall behind on their mortgage payments.  It also requires counseling for higher risk FHA borrowers prior to purchasing their home.

The bill includes homebuyer protections for families taking out riskier zero down payment loans, and for borrowers who represent a higher credit risk.  Specifically, the bill requires disclosures spelling out the costs and risks of zero-down and lower-down payment loans, and requires borrowers to receive notice of the availability of counseling in the event they fall behind in their loan payments.

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