Foreclosure Crisis

Floor Speech

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Mr. ELLISON. Let me say, I do thank the gentleman, but I do it in all sincerity. Congressman Miller, you and Congressman Frank and Congressman Watt and Congresswoman Waters and Congressman Gutierrez and Congresswoman Maloney have really been offering the kind
of leadership on the Financial Services Committee that any freshman or sophomore Member could only dream of. Any freshman or sophomore Member joining our committee could easily wonder where do I fit in and all this stuff, but you all have carved away so that those of us who have a compassion for consumer justice and for an America where we have shared prosperity, not just for some of us but where all of us have an opportunity to do well and take care of our families, you all have cut a wide berth for us, and so I thank you for that.

Let me say about the foreclosure crisis, in many ways I come here somewhat embarrassed because we could have had a bill like this years ago. It is not as if you and Congressman Watt didn't think of it. It is not as if the Miller-Watt bill wasn't on your mind back in the 109th Congress and 108th Congress. It was there, but it took this propitious moment to get as close as we are. And yet, we still don't have a signed bill. We have a bill that has passed through the House, and we have great hopes for it getting through the Senate, and we have even greater hopes to get it on the President's desk for signature. But the moment that the American people are waiting for, which is to end predatory mortgage lending, that moment has yet to come. And we have seen foreclosures that have rivaled the Great Depression. That is very disturbing to me.

I want the American people to look at this chart that we have here tonight. The number of new foreclosures increased dramatically between 2005 and 2008. That is precipitous growth in foreclosures. As foreclosures were going up, we also see human beings attached to each one of those foreclosures. Congressman, you know what I am talking about. The stories can be told.

Let me tell a story. I was knocking on doors one day and I saw a gentleman hobble to the front door to answer the door to talk to me. This particular gentleman lived on the south side of Minneapolis. I heard a voice come from deep within the house say, Be careful, Honey, and it clearly was his partner. And he hobbled up to the front door anyway on a cane.

I said, How are you doing?

He said, Fine.

I said, I'm running for Congress. I want to go there and I am going to work on consumer justice. I am real concerned about credit cards and real concerned about predatory lending.

He said, I hope you are, because let me tell you, I was on my roof trying to fix it. It is because I didn't have the money to fix it to hire a guy who really knew what he was doing. My wife told me not to do it, but I did it anyway. As usual, she is right. I fell. I hurt my back, which I hurt years before, and we didn't really have the money. It cost us $1,800 for an emergency vehicle to come get me. They got me there. I had a big bill. I didn't know what hurt more, the back or the bill. I didn't have the money, so I put it on a credit card. I ended up getting another credit card, and I started juggling these cards. And then when the mortgage payments came and I wasn't working, I just couldn't keep up.

Well, a few years ago we bought this house and we had a huge balloon payment after 3 years. We thought we would be able to do it because when we talked to the guy, he said, You know what? The value of your house is going up and you will be able to do a refinance and you won't have any problem.

That man told me, Look, I have big credit card debt and medical debt, and I am starting to get notices that they are going to foreclosure if I don't make some payments to the bank. Unfortunately, time went by, November came, I ended up being a Congressman, and this man ended up being in foreclosure.

The sad fact is the people who are in foreclosure, there are a lot of ingredients to this very sad cake; but one is hard times and economic difficulty, and two, bad loan products. The combination of the two makes for foreclosures.

As we open up tonight, Congressman Miller, I am grateful to you and Congressman Frank, Congressman Watt, Congresswoman Waters, Congresswoman Maloney, and all of the people who have been leading the charge on this issue.

I want to keep it in mind that we are not talking about just statistics. We can tick off, in 2008, there were 2,417,000 foreclosures, but there was a life and a family connected to each one of those.

As we do this Special Order tonight, we need to keep that in mind.

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Mr. ELLISON. So if the gentleman would yield back. The bottom line is, you are a lawyer, you are a Member of Congress, you have served in the North Carolina State Legislature, you're a man, clearly, of ability and all these things--I'm not just praising you gratuitously, I'm just identifying the facts--and here you walk into a transaction to buy a home, and quite literally you are at a disadvantage because the person on the other end of the transaction has done more transactions in a week than you have in a lifetime.

Now, imagine a person who is a first-time homebuyer, a person who has not finished law school and college and maybe even high school, a person who maybe works hard every day, and the idea of buying a home for them is a dream come true, maybe nobody in their family has ever owned the place where they lived. And so they're juiced up, they're excited, and they really don't understand the documents that they're signing.

The fact is, I think that this legislation that you have helped shepherd through Congress is a long time coming. And we need people to really register their support for a piece of legislation like this. I just want to ask you a question, Congressman, because I think it's an important one.

Now, someone might make the case that, okay, Congressman, you're talking about predatory lending a lot. What about predatory borrowing; isn't it true that some of these people bought loans that they knew they could not afford? Well, what are your views on that, given the fact that people were in fact steered to more expensive loans, that mortgage brokers--some of them, not all, some of them--did get paid to get you to pay a higher cost loan, that there were these things like information asymmetries; what does the reality of predatory borrowing really mean?

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Mr. ELLISON. Well, let me say, I'm proud to be on that bill with you. I think that Elizabeth Warren, Professor Stiglitz and Professor Shiller are all brilliant for coming up with the idea. The fact is, if you look at many of these mortgages, they were not safe at any speed, to borrow a phrase from Ralph Nader.

The fact is, if the only way that this mortgage, quote-unquote, works is if you can refinance it in 3 or 2 years, then that is a mortgage that doesn't work. It's designed to end up in foreclosure but for a very shaky assumption.

If the gentleman would allow me to mention in our waning time, I would also like to say this about the bill we just passed through the House. And that is that many of the properties that have ended up in foreclosure are not homeowner-occupied. In other words, they're multifamily dwellings. They're investor-owned. And in many States across our country, you can be a tenant who has paid every, every rental payment on time, never missed one. And yet if your landlord didn't use that money you gave him to pay that mortgage on that building, you could find yourself kicked out without any notice at all.

Some States have regulations, many don't. This bill gives people 90 days from the date of foreclosure in order to stay and make new plans for their lives.

I think this is a critically important piece of legislation, very important provision in the bill, and I'm glad it is a part of it.

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