Dangerous lending practices and loose underwriting in the subprime mortgage market have put 2.2 million families in danger of losing their homes to foreclosure.[1]  These families are trapped in "exploding" adjustable-rate mortgages (ARMs) that are due to increase to unaffordable interest rates.  In fact, hundreds of thousands of families face rate increases at the same time that their houses are worth less than the balance on their mortgage.  

Very few of these homeowners will be able to sell or refinance.  Loan servicers who could modify loans to make them more affordable aren't doing so:  A recent report by Moody's found that loan servicers had only modified one percent of mortgages that increased to higher rates in January, April and July of this year.[2]  Unless Congress takes action, these families lose homeownership, surrounding neighborhoods lose property value, and the entire economy suffers.

We urgently need legislation that would allow lenders and loan servicers to modify mortgages to allow families to continue paying on their loans and keep their home.  This would provide judges the authority to modify harmful mortgages marketed by subprime lenders in recent years, and would help more than 600,000 financially-troubled families keep their homes.

[1] Center for Responsible Lending, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," December 2006, http://www.responsiblelending.org/pdfs/foreclosure-paper-report-2-17.pdf.
[2] Michael P. Drucker and William Fricke, "Moody's Subprime Mortgage Servicer Survey on Loan Modifications," Moody's Investors Service (September 21, 2007).