Dear Mrs. Porter:
Thank you for contacting me regarding the issue of subprime mortgages. It is good to hear from you.
As you know, in 2008 an estimated two million homeowners could lose their homes as a wave of interest-rate resets are expected on adjustable rate subprime mortgage loans. If nothing is done, this level of foreclosures will undoubtedly result in hundreds of billions of dollars in lost home equity, declining home values in communities across the country, and an overall decline in the U.S. economy. I have long been concerned about this situation. Last spring, as Chairman of the Transportation and Housing and Urban Development Appropriations Subcommittee, I held a hearing to analyze proposals to reform and modernize the Federal Housing Administration (FHA) and other potential remedies to help stem the tide of projected home foreclosures.
I am actively engaged with my colleagues to identify ways to prevent the projected wave of foreclosures from being realized in the coming years. I strongly support efforts between borrowers and lenders to forestall foreclosure, but I believe there are steps that Congress must take as well.
To help educate borrowers of their options to avoid foreclosure, I secured $180 million in the Fiscal Year 2008 Consolidated Appropriations bill to provide housing counseling services across the country. Housing counseling programs assist borrowers with mortgage modification and restructuring so they can avoid or mitigate the losses associated with foreclosure.
In addition, I was a key leader in pushing S. 2338, the FHA Modernization Act of 2007, sponsored by Sen. Christopher Dodd (D-CT), through the Senate. The FHA Modernization legislation provides the FHA new flexibility to tailor products to customers based on their credit rating, income, and relative risk. FHA modernization is a key component in addressing the subprime crisis because it will enable the FHA to offer safe, alternative mortgage options - as opposed to adjustable rate mortgages to borrowers.
As the 110th Congress progresses, I will carefully consider all legislation regarding mortgage reform, and will certainly keep your thoughts in mind. Thank you again for contacting me, and please don't hesitate to share your thoughts in the future.
I hope all is well in Seattle.
