In Wayne County, Michigan, 195 homes go into foreclosure each day. According to the Congressional Oversight Panel, nationally, 1.8 million homes were lost to foreclosure from July 2007 through August 2009. And yet, in spite of these haunting numbers, as the New York Times blogged last week, bank executives seem more concerned about winning the blame game than anything else. Testifying before the House Financial Services Committee, the CEO of JP Morgan Chase insisted the foreclosure crisis is really the fault of the mortgage brokers. However, the New York Times revealed details of JP Morgan Chase's circulation of subprime loan advertisements advocating the loans' loose requirements to mortgage brokers back in 2005. The headlines of the leaked ads [pdf] read, "The Top 10 Reasons to Choose Chase for All Your Subprime Needs," "Chase No Doc," "Got Bank Statements?" and "Get Approved!"
Too many companies like JP Morgan Chase rushed into this sub-prime mortgage spotlight of praise and profit to the demand of the investors, but now after being invited to take their rightful places on the stage of reality and responsibility, nobody's walking. The stage is too bare and the call too faint. Such seems to be precedence. The call to rewards and favor is always loud and clear while the call to justice resounds barely above a whisper. It is mind-boggling to believe that with such a vast chain operation, banking giants like JP Morgan Chase were not the least bit aware of the wrongful lending practices being undertaken. Nonetheless, now we know that JP Morgan Chase was more than hands on. They advertised and promoted this unscrupulous lending scheme. They were hands on when the money was flowing and hands off when critics were looking. Not only should they own up to the responsibility and take their rightful places of shame, but they should change their modus operandi to make sure that this doesn't happen again.
While last week's annual Dow Jones record high may breed optimism for many, I cannot help but be fearful of a possible repeated cycle emerging in which the run of record high revenues may continue to fuel these greedy practices that create inevitable losses, disproportionately felt by the hard-working individuals on Main Street. Sadly, a year after the supposed push for heightened financial reform, countless individuals are still left unemployed and financially plagued with burdensome mortgage loans. We cannot continue to allow Wall Street greed to solely drive revenue at the expense of others' welfare. Something must be done not only to stop this cycle, but most importantly, to provide relief. And I have a plan.
With Detroit being among the worst hit cities of this crisis, I have been tirelessly and intimately engaged in getting out better tools for people who are stuck in this downward spiral. First, since countless individuals facing foreclosure lack legal representation to protect their rights, I am working to increase funding for Legal Services Corporation (LSC) and lift the restrictions on whom LSC can service. LSC provides civil legal assistance for low-income individuals, but currently inadequately funded, in the category of foreclosures -- LSC-funded programs have been projected to turn away two for every person served. Should such restrictions get lifted and funding increased, more people will be empowered with the necessary resources to battle these scheming banking giants. In fact, next Tuesday, I will be holding a hearing on the fine points of these needed changes.
Second, Treasury Secretary Timothy Geithner recently announced that approximately 500,000 American families were participating in the home loan modification program first initiated in March by the Obama Administration. Paling in comparison to the great number of those facing foreclosure, this rather skim number indicates the mere few who have broken down the barriers to qualify for the program. The Home Affordable Modification Program (HAMP) neglects a large portion of those in need, because it requires unreasonably complex paperwork and unfair qualification restrictions. Revamping the program's administrative process will allow the program to carry out its intended purpose. To make matters worse for borrowers, bankruptcy judges are prohibited in modifying home mortgages, such as reducing excessive interest notes and hidden charges. Eliminating this anomaly in law will encourage more lenders to voluntarily modify mortgages and broaden bankruptcy foreclosure relief for the larger sums.
I will continue to fight and demand for all these remedies in the coming weeks in order to get out better solutions to help those facing such financial hardships. Like many of the other nationwide debates we find ourselves immersed in today, this debate on the subprime mortgage crisis is sadly shifting in focus at the detriment of people's welfare. We must now refocus and bring back into the spotlight the need for change and aid those who have fallen victim during these financially perilous times.