From the US Conference of Catholic Bishops' Department of Justice, Peace and Human Development
via Joanne Welter, Tucson Diocesan Social Mission Office
ACTION
Contact your Senators (call the capitol switchboard 202.224.3121 or http://www.senate.gov/ to find your Senators and their contact information) and urge them to help families most in need keep their homes and stabilize their communities.
- Urge them to establish protection for families who get subprime loans or other non-traditional mortgages.
- Urge them to provide stronger protections for homeowners vulnerable to predatory lending practices.
- Urge them to provide some relief to troubled homeowners.
- Urge them to oppose federal preemption of stronger state and local anti-predatory lending laws.
CURRENT SITUATION
The Senate is considering a bill that would provide tax breaks to home builders; it makes available $4 billion in additional Community Development Block Grants (CDBG) to States and local governments who could use the money to help struggling homeowners refinance their troubled mortgages; and, its also funds more mortgage counseling. Little assistance is provided directly to low-income families struggling to pay their mortgage.
BACKGROUND
More than two million families across the country that bought their homes with subprime mortgages are likely lose them to foreclosure. This crisis is having a drastic effect on the American economy, especially the housing market.
This crisis was brought about, in part, by some unscrupulous lenders who targeted minorities, the elderly, and the poor with high priced loans. These particular lenders or mortgage brokers used a variety of practices including outright fraud and deception in some cases to sell their product (e.g. charging borrowers excessive, often hidden fees; successively refinancing loans at no benefit to the borrower; making loans with little regard to a borrower's ability to repay; and engaging in high pressure sales tactics). These subprime loans were then packaged together and sold on world markets as mortgage-backed securities. When the homeowner could not make the monthly payment, it was not the lender or mortgage broker who lost their investment, but the owners of the security.
CATHOLIC SOCIAL TEACHING
The United States Conference of Catholic Bishops wrote to Congress in 2002 insisting that “[e]fforts to revitalize neighborhoods and to expand homeownership among low income families are being threatened by abusive lending practices. These practices, termed predatory lending, trap far too many unsophisticated and vulnerable people, often the elderly, into high cost loans that frequently lead to foreclosure after stripping any equity from the home. The Catechism of the Catholic Church condemns this sort of speculation, this usury, as morally illicit.” (2409)
For More Information:
Thom Shellabarger at the USCCB, 202-541-3189 or tshellabarger@usccb.org
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