Subprime Mortgage Foreclosure Woes Scrutinized By U.S. Senate

( EMAILWIRE.COM, March 23, 2007 ) WASHINGTON - At the Senate Banking Committee hearings on Thursday officials downplayed the potential spread of problems in the subprime mortgage sector. One official, Roger Cole, Director of the Federal Division of Banking Supervision and Regulation told the committee that he thought the deterioration in the housing market would stay limited to the subprime sector.

“We are not observing spillover effects from the problems in the subprime market to the traditional mortgage portfolios or…to the safety and soundness of the banking system,” said Cole.

Subprime mortgages, which became widely popular in the U.S. mortgage market in recent years, are primarily used by people with poor credit histories or people who wanted to buy a larger house than they might be able to afford under more conservative lending guidelines.

One of the largest of the lending institutions which sold these types of loans, Countrywide, said that they thought that loans made in 2006 would turn out to have the highest rate of foreclosures in the company’s history. Countrywide’s Executive Managing Director, Sandor Samuels, said 2006 could be worse than the year 2000, “for which the cumulative foreclosure rate was 9.89 percent.”

The Chairman of the Senate Banking Committee, Connecticut’s Senator Christopher Dodd (D) informed those present at the hearing he called that he plans to create legislation to prevent consumers from falling victim to predatory lending, but he thought the broader solution to the crisis might not be a legislative one. “Instead, I would seek to ask leaders…to come together and try to work out an efficient process providing some relief for these homeowners who will be caught in this bind,” Dodd said.

Foreclosure expert, Patrick McGilvray, J.D., President of California-based Thehomebuyingcenter.com commented, “I believe that overall a market-driven solution is in the best interest of the nation, yet there is still a role for governmental regulators to ensure our banking system is not abused by irresponsible lenders.” Mr. McGilvray’s company matches people that need to sell their homes with real estate investors and first-time home buyers across the United States.

In other developments the nation’s 5th biggest home building company, KB Home cautioned that higher rates of foreclosure could lengthen the downturn in the housing sector. The CEO of the company said that more stringent lending requirements for new borrowers and high default rates on existing loans could forestall any recovery in the sector.

Contact:
Patrick McGilvray, J.D.
Tel: 888-444-BUYER
http://www.thehomebuyingcenter.com

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