2:26 PM EDT
Brad Miller, D-NC 13th

Mr. MILLER of North Carolina. Mr. Speaker, I wish to address specifically the amendment that Mr. LaTourette and I have offered.

Mr. Speaker, the worst of the foreclosure crisis is yet to come. Mr. Frank just corrected incorrect factual assertions. Let me correct one as well.

Mr. Feeney said a few minutes ago or gave the example of a 3 percent teaser rate. Mr. Speaker, the typical initial rate for the mortgages that are causing this problem was 8 1/2 percent, which is already well above the conventional prime rate.

According to The Wall Street Journal, 55 percent of the people who got those loans qualified for prime loans. Their trust was betrayed. And the typical adjustment after just 2 or 3 years was a 30 to 50 percent higher monthly mortgage payment. Seventy percent had prepayment penalties so people couldn't get out and would have to pay when they got out, when they refinanced out of a loan they could not possibly afford and the lender never intended they would afford because they required they come

back and refinance again.

It's not surprising that 3 million homeowners with subprime loans are expected to enter foreclosure proceedings in the next couple of years and 2 million of them will likely lose their homes. Another 40 million homeowners will see the value of their homes decline when other homes in their neighborhood are foreclosed, and they will lose $200 billion in their home property values.

Credit Suisse now estimates that there is another wave of foreclosures coming after this one as even more exotic, innovative mortgages go into default. Credit Suisse estimates that in the next 5 years 12.7 percent of homeowners with mortgages are expected to lose their homes to foreclosure.

Mr. Speaker, when those families lose their home to foreclosure most will fall out of the middle class and into poverty.

The policy failures that caused this problem, that led to this crisis, were in Washington, but State and local government are having to deal with the consequences.

Property rights, contracts and foreclosure proceedings are all matters of State law, not Federal law. The laws vary from State to State, but every State's foreclosure law includes protections for the borrowers whose homes are being seized and sold to pay the mortgage.

[Time: 14:30]

State laws have notice requirements. They provide reasonable time for the families who are losing their homes to find someplace else to live and to move; they limit the costs that they be charged to homeowners; they allow homeowners to cure defaults in some circumstances. Many States limit or prohibit deficiency judgments if the sale of the home is not enough to pay off the debt, and on and on. And several States, not surprisingly, are now considering additional laws to protect borrowers who

are losing their homes to foreclosure.

Recently, there has been some suggestion, some hint in the press and elsewhere that if State and local governments start getting underfoot, if they start making a nuisance of themselves, the lending industry will argue that some of the especially annoying State laws, State foreclosure proceedings cannot be applied to mortgage holders or mortgage services that are affiliated with national banks or trusts.

There is no Federal foreclosure law, but they argue that State foreclosure proceedings could be preempted by Federal laws that govern national banks and trusts. This amendment clarifies that State laws and local ordinances on foreclosure and foreclosed properties are not preempted by Federal law.