Jeb Hensarling: “there are clearly many reasons why home loans go delinquent. The number one reason, we all know, is the loss of a job…”

“there are clearly many reasons why home loans go delinquent. The number one reason, we all know, is the loss of a job, or other bad luck like long-term illness or disability. Clearly a phenomenon that has been discussed at quite some length in committee and on the floor, predatory lending has played a significant role as well. And many of us have urged very robust antifraud provisions and increased resources for enforcement. But I think we also shouldn't underestimate the role of another phenomenon in home loans becoming delinquent, and I call that predatory borrowing. People who knowingly take advantage of the system, who game the system, who give false information in their disclosures and their verifications. And making the risk-based analyses that lenders use to determine how much money a person should be responsibly lent makes that impossible. And there are borrowers, there are borrowers all across America who have knowingly exaggerated their incomes. They represented that they used a home for their primary residence, and they didn't. They acted as straw buyers in property-flipping schemes and used other scams to qualify for loans that otherwise they would not have qualified for and loans that they cannot pay back, and to a great extent many other people are now suffering.”