Current Trends in Foreclosure and What More Can Be Done To Prevent Them

Published: July 28, 2009

Download the complete testimony

Keith Ernst, CRL's Director of Research
Date Filed: July 28, 2009

Testimony of Keith S. Ernst, Center for Responsible Lending Before the Joint Economic Committee of the U.S. Congress 

In testimony before the Joint Economic Committee, Director of Research Keith Ernst testified that foreclosures continue to soar and the mortgage market continues to suffer.  He also presented testimony showing that risky loans, not risky borrowers, lie at the heart of the mortgage meltdown.  He recommended several key actions to mitigate the continued flood of foreclosures and avert similar crises in the future:

  • Create a Consumer Financial Protection Agency as outlined in H.R. 3126;
  • Pass legislation requiring mortgage originators to determine a consumer's ability to repay the mortgage and encourage the Federal Reserve Board to finalize its proposed rules banning yield spread premiums;
  • Ensure that the Administration's current efforts to prevent foreclosures—the Home Affordable Program and the Hope for Homeowners Program—work as effectively as possible, including ameliorating the tax consequences of loan modification and principal reduction; and
  • Lift the ban on judicial loan modifications of mortgages on principal residences.