September 6, 2007

“Every day people like you and me are facing a financial crisis  – the numbers are truly shocking.   At current rates so far this year, RealtyTrac expects foreclosure filings to hit two million in 2007, or roughly one per 62 American households — a rate approaching heights not seen since the Great Depression.[1]  I drive through neighborhoods throughout our congressional district where the evidence of the crisis is visible. It’s time for the Bush Administration and the Congress to act to protect homeowners.”  -- Donna Edwards

Dear Friends,

Over the past several weeks, many of us have seen the headlines and read the stories concerning the recent fallout caused by the credit and mortgage implosion.  As a result, we have witnessed, and in some cases been affected by, the staggering losses suffered on Wall Street and financial markets around the world.  But it is not on Wall Street where the real suffering is occurring but rather in the thousands of homes of working families across this country who face the harsh reality of foreclosure and bankruptcy.  And, even if you are not facing foreclosure, the impact on your home value, personal investments and savings, and the general financial markets is significant.

Every day people like you and me are facing a financial crisis – the numbers are truly shocking.  At current rates so far this year, RealtyTrac expects foreclosure filings to hit two million in 2007, or roughly one per 62 American households — a rate approaching heights not seen since the Great Depression.[2]  I drive through neighborhoods throughout our congressional district where the evidence of the crisis is visible. It’s time for the Bush Administration and the Congress to act to protect homeowners. 

Maryland's foreclosure ranking alone has jumped from 40th in the nation last year to 18th this past June.[3]  In my own community of Fort Washington my zip code has the highest number of foreclosures in Prince George’s County.  The problems of escalating interest rates, mortgage payments, foreclosures and possible bankruptcy affects the lives of many people, including friends and neighbors, in our state and especially in our district.  According to the Washington Post,  more than 700 homes were in foreclosure in Montgomery County between April and June  of this year.[4]  In Prince George’s County, the numbers are more staggering, with the County facing the highest percentage of homes in foreclosure in Maryland. More than 2,300 foreclosures have been recorded in the county this year.[5]

Most of those foreclosures in Prince George’s County, according to a study conducted by ACORN, occurred in zip codes predominantly in Congressman Albert Wynn’s 4^th Congressional District.[6] 

The foreclosure crisis is further aggravated by the highly criticized bankruptcy bill that Congressman Wynn voted for in 2005 (S 256, House Vote 108, 4/14/05), which was seen by many as a triumph for banks and other lenders.  Many homeowners falsely believe that they can renegotiate their mortgage payments through bankruptcy courts to allow them to remain in their homes while paying under new terms for their home loans.  Unfortunately, the bankruptcy laws supported by Congressman Wynn do not allow for any renegotiation for consumers, placing them in greater jeopardy of losing their homes in the current crisis.  The most that a person gets is extra time to catch up on payments in arrears – but there’s no relief for vulnerable homeowners when the adjustable rate increases the monthly payment by hundred and hundreds of dollars.

So when it comes to an individual’s single greatest asset, their home, homeowners and the courts are unable to structure better terms for the mortgage under the law – this is true even when the homeowner was paying on time and in good standing until adjustable rates skyrocket under the terms of sometimes unscrupulous loans.  The revision to the bankruptcy law supported by Congressman Wynn also made it harder for people to declare bankruptcy, especially a Chapter 7, or ''straight bankruptcy,'' in which everything is liquidated, by setting tighter income and means tests to qualify. And despite the current trends, the banking industry wants no change in the laws.[7]  Thus, while corporations like Halliburton, and even subprime lender American Home Mortgage, have wide latitude to restructure their debts, not so for ordinary homeowners.  And, don’t count on Congressman Albert Wynn to lead the charge on reform as he has taken over $50,000 in campaign contributions from commercial banks and credit companies since 2001 – including some of the worst predatory lenders and the lead lobbyists for the banking industry.[8]

I believe we need a fair, common sense approach to deal with the mortgage and credit crisis we face today.  As a member of Congress I will:

• Work with fellow Democrats to provide additional federal assistance to help homeowners to restructure their mortgage loans and meet their obligations.  The steps announced by the Bush Administration will affect only 80,000 homeowners through modest changes in lending requirements of Federal Housing Administration, without Congressional action.[9]  The infrastructure is already in place through principle mortgage lenders Fannie Mae and Freddie Mac to be able to help thousands of additional families refinance their mortgages if Congress makes necessary funds available to guarantee loans.  Remember, this is not about the federal government bailing out homeowners – it’s about enabling people to get a loan guarantee that’s affordable, with fair terms, and fixed rates.

• Demand legislation that requires additional oversight and regulation of the mortgage and lending industries and the market ratings agencies.  Yes, sometimes people make bad decisions and must therefore pay the consequences, but far too often people are being taken advantage of by those who are trying to make some quick money.  The results can be disastrous.  I will not be beholden to any industry and I will work with the experts to find the common sense solutions that provide the necessary protection to consumers while allowing these industries to continue to do business.

• Go back to the drawing board on Bankruptcy Reform to ensure that the laws protect consumers by enabling them to restructure mortgage loans and other substantial consumer obligations through the oversight of the bankruptcy courts – let’s give consumers at least as good a deal as corporations get for a new start through bankruptcy. 

• Champion legislation to require mortgage companies to retain mortgages they approve for some reasonable period of time.  A contributing factor in the current crisis is the ability of originating lenders to immediately sell off risky loans, leaving the risk in someone else’s bucket. Consumers should have a direct link with their lenders when they get into trouble.  Too often, consumers don’t even know who to call or who has authority to help them out until it’s too late.

I don’t claim to have all the answers to all the issues that we face today.  But as your representative, I can say that I will work hard everyday to find the answers and provide the necessary leadership to proactively address the issues facing our district.

I want to hear from you so please feel free to call our campaign office at (301) 316-1880 or visit us on the web at www.donnaedwardsforcongress.com.

Sincerely,

Donna Edwards

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