The loss of a home is devastating to both the family and the community. For a family, owning a home is often their only piece of the “American Pie.” The equity from owning a home is often the only means to secure funding for a new business, college tuition or retirement. For the community, increased foreclosures often turn once-vibrant neighborhoods into neglected, blighted areas, lowering property values and ultimately raising costs for local governments.

Predatory lending is a leading cause of foreclosures across this country. It compromises the opportunity to own a home and hinders economic stability, creating greater disparities in wealth.

The nonprofit Center for Responsible Lending projects that as this year ends, 2.2 million households in the subprime market will either have lost their homes to foreclosure or hold subprime mortgages that will fail over the next several years. These foreclosures will cost homeowners as much as $164 billion, primarily in lost home equity.

The center also projected that nearly one out of five (19 percent) of subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002.

Approximately 1.4 million of 15.1 million loans analyzed from 1998 through 2006 were for first-time home buyers, while others were for refinancing. To date, more than 500,000 of those subprime borrowers have lost their homes to foreclosures. An additional 1.8 million are likely to follow as the market deteriorates. That’s nearly 2.4 million lost homes.

In my home state of Ohio, the foreclosure epidemic went from bad to worse last year as the number of new cases grew by nearly 24 percent from 2005. Cuyahoga County led the state in new cases with 13,610 new filings last year. This ranking has attracted national attention, with Ohio’s foreclosure rate currently at 18 percent, which is higher than the national average of 17 percent.

Predatory lenders often target low-income and minority communities. Subprime loans are three times more likely in low-income neighborhoods than in high-income neighborhoods and five times more likely in minority neighborhoods than in white neighborhoods. Additionally, they often prey on the elderly who have been in their homes all of their lives and have a substantial amount of equity in their home. They promote balloon and adjustable rate mortgages that look attractive and are affordable in their initial stages. However, after two years or more, these loans readjust to much higher payments with higher interest rates.

One of my constituents is currently in an adjustable rate mortgage, which locked in a payment of $1,088 for two years. After two years, the mortgage payment increased to $1,488. Three months later the payment increased to $1,715. This payment increase has had a significant impact on this individual’s budget and because the person is not in a position to refinance, foreclosure looms.

Predatory lending has expanded its reach beyond mortgage lending, becoming increasingly prevalent in refund-anticipation, auto and payday loans. There were over 12 million refund anticipation loan borrowers in 2003. Tax preparers and lenders strip about $1.57 billion in fees each year from earned-income tax credits paid to working parents, according to a 2005 study by the National Consumer Law Center.

It is also estimated that predatory payday lending practices cost American families $4.2 billion annually. Additionally, research indicates that minorities pay on average $2,000 more per vehicle purchased than non-minorities. Predatory auto lending is taking an estimated $2 billion a year out of African American communities alone.

For the past seven years, I have backed the Predatory Lending Practice Reduction Act. This legislation calls for federal certification of mortgage brokers and agents and stiffer penalties for violation of federal law. Additionally, it will authorize funding for Community Development Corporations to provide training and education on this issue. Not all subprime lenders are predatory, but most predatory loans are subprime loans. This legislation would work to weed out the bad actors that are responsible for equity stripping and other predatory practices.

It is my hope that this legislation will help stem the tide of the growing foreclosure issue and help combat unscrupulous predatory lending practices. One of the first steps toward creating wealth is homeownership, and I want to ensure that everyone is provided the opportunity to realize that dream.

Tubbs Jones is a member of the House Ways and Means Committee.