Full Press Release here:
November 2, 2007
Under Secretary for Domestic Finance Robert K. Steel
Testimony before the House Committee on Financial Services
Washington- Chairman Frank, Ranking Member Bachus, Members of the Committee, good morning. I very much appreciate the opportunity to appear before you today to present the Treasury Department's perspective on efforts to coordinate and enhance foreclosure prevention.
Let me begin by broadly examining the characteristics of foreclosures, in both good times and bad, to provide a better perspective on how to approach this issue, and then provide an update on the various actions we have taken to address the current situation.
As you know, we are experiencing a period of adjustment in the credit and mortgage markets. Fortunately, this market stress is occurring against a backdrop of healthy U.S. fundamentals and a strong global economy. Yet, the Administration recognizes the importance of housing to our economy, and as Secretary Paulson has said, the housing decline is the most significant current risk to our economy. In addition to the housing decline having a penalty on economic growth, a significant number of homeowners will experience strain due to resetting mortgage rates and home price depreciation.
The issues of foreclosure are complex and nuanced. In truth, thousands of homes end up in foreclosure every year, even when housing markets are strong. Between 2001 and 2005, for example, the U.S. rate of foreclosure starts averaged approximately 1.7 percent, meaning more than 650,000 homeowners began the foreclosure process each year. This baseline rate of foreclosure can result from events such as job loss, credit problems, a change in family circumstances, or other sources of economic instability. These foreclosures, although unfortunate, are largely unavoidable.