Predatory mortgage lending, fueled by an explosion in high-cost, subprime loans, is creating a "crisis for millions of American homeowners" that requires action, Senate Banking Committee Chairman Christopher Dodd, D-Conn., said Wednesday.
Underscoring his point, Amy Womble of North Carolina told the panel how she refinanced into what she thought was a less-expensive mortgage after her husband died, only to find the monthly payments were $2,100, more than twice what she'd been told.
"I cannot afford this loan, and I'm very afraid I'm going to lose my home," Womble said, calling the house a constant for her children since their father's death.
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Dodd and other lawmakers in a recent letter to regulators also expressed concern that most subprime loans are now adjustable-rate products, where monthly payments can jump 50% or more after an initial two- year period. "Subprime foreclosures threaten to displace more African-American families than (Hurricane) Katrina did, but it will be a silent and invisible storm," said Martin Eakes, CEO of the North Carolina non-profit Center for Responsible Lending.
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