Why so many home foreclosures? $210 million spent on Congress by mortgage lending industry may be part of answer
While spending millions lobbying Washington and plying federal candidates with millions more in campaign contributions, the mortgage lending industry has successfully blocked Congress from curbing lending abuses that now threaten millions of home owners nationwide with foreclosure, a new Common Cause report shows.
The second in a series of “Ask Yourself Why” reports focusing on how average Americans are affected by special interest spending in Washington, the report looks at the mortgage lending industry’s $210 million investment in campaign contributions and lobbying. One result is a Congress that has refused to restrict mortgage lending abuses that have saddled economically vulnerable families with home mortgages they cannot afford. In 2006 alone, foreclosure filings across the country were up 42 percent compared to 2005 – a total of 1.2 million homes in jeopardy, or one in every 92 homes. And foreclosures continue to mount in 2007.
Colorado, Georgia and Nevada last year posted the highest foreclosure rates in the nation, while Texas, California, Florida, Ohio and Michigan had the highest numbers of foreclosures.
The foreclosure crisis is having a ripple effect, as foreclosed homes increase the supply of available housing, further depressing home prices, with fears that a declining housing market may harm the larger economy.
“This foreclosure mess is partly the result of our flawed campaign finance system, which encourages special interests with legislative agendas to pour millions of dollars into the campaign coffers of key Members of Congress,” said Common Cause Executive Vice President Jon Goldin-Dubois. “The public financing of congressional campaigns would help disarm special interest politics in Washington and ensure that public policy decisions benefit all Americans, not just those with deep pockets.”
The report found:
Between 1999 and the end of 2006, ten of the nation’s largest mortgage lending companies, their two trade associations, and their corporate parents contributed more than $22.2 million to federal candidates. Of that total, nearly $8.2 million went to Democrats and $14 million to Republicans.
Warnings about new mortgage products and their dangers to borrowers date back to at least 2000, but Congress failed to act.
As consumer and housing advocates successfully pushed for more state regulation of mortgage lenders, the industry went on the offensive, seeking federal pre-emption of tough state laws, with disgraced legislator Rep. Bob Ney as their champion.
The mortgage lending industry remains a potent political power in Washington. Since 1996, major industry players, their trade associations and corporate parents have invested close $500,000 in the chairmen and ranking minority members of the Senate Banking, House and Urban Affairs Committee, and the House Committee on Financial Services, respectively.
“By funding congressional campaigns with public dollars, our congressional candidates can be free of all dependence on special interests for their election. Then they will be free to truly represent our best interests,” Goldin-Dubois said.
Read the report here.