Jack Reed: “today I introduce the Homeownership Protection and Enhancement Act of 2007, HOPE Act. This legislation would reauthorize…”

“today I introduce the Homeownership Protection and Enhancement Act of 2007, HOPE Act. This legislation would reauthorize and amend Section 106 of the Housing and Urban Development Act of 1968, so that we can improve on Federal efforts to support and sustain homeownership. As we all know, during the past several years, housing prices in cities and States around the country have far outpaced any increase in wages. Families have been stretching themselves financially to get into homeownership, and many families have started using alternative or exotic mortgages loan products to purchase their homes. According to First American Loan Performance, in 2006, in my own State of Rhode Island, nearly 16 percent of all home-purchase loans were 'interest only.' However, as home prices have declined, many people who took out these exotic loans are now finding they owe more than the value of their property. The Center for Responsible Lending estimates that nationally one in five subprime loans originated during the prior 2 years will end in foreclosure, costing homeowners $164 billion, mostly in lost equity. 'It appears that we are just at the beginning of what could be a perfect storm, as many credit-stressed borrowers still face resets of these exotic adjustable-rate and payment option loans. There were 1.2 million foreclosures reported nationwide last year, up 42 percent from 2005, according to RealtyTrac, a database of foreclosed properties.”