WASHINGTON — In an environment of rising foreclosure rates,House Financial Services Committee Chairman Barney Frank (D-Mass.)sent out a letter to his fellow members of Congress looking fortheir support in determining government's role in the scenario.

“Foreclosure rates are rising, housing prices are stagnating andtoo many consumers are surprised to find out that their monthlypayments are spiking,” he wrote. “The difficulties have beenconcentrated in 'subprime' loans, which generally go to borrowerswith limited or damaged credit, although there is evidence thatsome borrowers are shifted into the subprime category because theyare African-American or Hispanic. Real damage has been done tofamilies and communities as many adjustable-rate mortgage loans'reset' to higher interest rates and monthly payments.”

Frank stated that he is interested in holding a series ofhearings to discover: (1) the scope of the problem and itsimplications for homeowners and the economy; (2) the causes of theproblem, (3) what regulators, industry and community organizationsare doing about it; and (4) what additional steps regulators andCongress can take to prevent similar situations in the future. “Wewill also be addressing the discrimination aspect of theseactivities,” he added.

Some non-legislative actions are already taking place. However,a number of states have passed strong consumer protections in thearea only to be preempted by federal regulators, which“Republican-led Congresses failed to address.”

Any legislation, Frank said, must protect all Americans frompredatory lenders, provide adequate and understandable disclosures,and ensure suitability of the loan to the borrower, whilepreserving credit availability. “We cannot return to redlining,” hewrote. “We will remember that before predatory lending provided toomuch bad credit, many communities had little access to credit atall. We must end discriminatory lending practices.”