Mr. Chairman, I would like to thank you for holding this hearing, and I would like to thank our witnesses for testifying today and tomorrow.
Nobody is in favor of "Predatory" lending. We have all heard the horror stories of unscrupulous people preying on the elderly, going through an entire neighborhood and negotiating home improvement loans. These same individuals then strip the equity from these homes, usually without even doing the repairs. There is a word for these practices, and it is fraud. These practices should not and cannot be tolerated. The perpetrators of these practices should be prosecuted to the fullest extent of the law.
But we must not throw the baby out with the bath water. Sixty-eight percent of Americans own their own homes. While I don't know the exact statistics, I am willing to bet not all of that 68% were candidates for the prime rate. I am pretty sure many of them did not qualify for prime.
So then, how are these people, who are not rich, or may have missed a payment or two in their lifetime able to afford homes? The answer, of course, is the sub-prime market.
The sub-prime market has been the tool for many Americans to achieve the American dream of owning their own home. Many of our largest and most reputable financial institutions are a part of the sub-prime industry. I believe this is a good thing, and a viable sub-prime market is good for our country.
We need to punish the bad actors. When fraud is committed, the perpetrators should be punished and punished severely. But we also should encourage the good actors. Citibank and Chase, to name two, have put into practice new guidelines to help eliminate abuses or even the possibility of abuses. Companies taking these steps should be commended.
When we try to eliminate abuse, we must make sure we do not kill the sub-prime market. We must not drive out the reputable institutions that make home ownership possible to so many who otherwise would not be able to achieve that dream.
Thank you Mr. Chairman.