The rate of foreclosures in the United States will remain higher than normal for the next 18 months as the current home loan crisis plays itself out, a senior U.S. Treasury official said on Friday.
A rising foreclosure rate during a housing downturn is not surprising, but largely because of lax underwriting in recent years, especially in the subprime market, a higher than usual number of homeowners will face delinquency during the next year and a half, Robert Steel, undersecretary for domestic finance, told a congressional panel in prepared remarks.
A spike in home loan failures, particularly among subprime borrowers with shaky credit, has rattled financial markets around the world and prompted a global credit crunch.
Steel was addressing a hearing of the U.S. House Financial Services Committee that convened to discuss reforms of the mortgage finance industry.
Last month, committee chairman Barney Frank introduced a bill that would set new consumer protection rules for the mortgage lending industry.
We are not interested in changing the dynamics of the marketplace in some sort of irreparable way, Rep. Al Green said in an opening statement, adding: We want to let the market do what it does but by the same token we want to help as many people and save them from foreclosure as we can.