Why Mortgage Foreclosure Rates are Skyrocketing

You have to wonder what's going on when mortgage foreclosure rates are skyrocketing nationwide: up 42 percent in 2006, compared to 2005, leaving up to two million families in danger of losing their homes.

It's probably not a shock to learn the mortgage lending industry has been spending money frantically in Washington, and has successfully blocked Congress for the last seven years from taking action to restrict lending abuses that have saddled the economically vulnerable with home mortgages they can not afford, according to The Washington Post.

This week put the number of homes that have been foreclosed or are in danger of being foreclosed on at two million.

Consider this: the industry spent nearly $220 million in Washington between 1999 and 2006. About $22 million of that was in the way of campaign contributions to federal candidates, while the rest was on lobbying expenses.

And what did the industry get for its money? Hands off from Congress, despite warnings from housing advocates dating back to 2000 about new mortgage products and their dangers to borrowers.

Much of the problems have revolved around sub-prime loans, which have flourished over the last decade. The most common loan of the sub-prime market is an adjustable rate mortgage that some call an "exploding ARM." The loan starts with a fixed "teaser" interest rate for the first few years, but then the rate gets much higher, and the borrower can't afford to pay it.

Common Cause took a close look this week at the money given by the industry in an effort to answer the question, "Why are mortgage foreclosure rates so high?"

It's clear this is another example of a wealthy special interest that has spent wisely in Washington to assure that its agenda and bottom line are protected, even at a cost to the public.

Click here to read the report. Click here to read more about a campaign for public financing of congressional elections.