In fact, Miller thinks the mortgage lending industry has pretty much reaped what it sowed, and he has little patience for the investment houses that he asserts knew they were making bad loans from the start.

Miller, however, does feel for those subprime borrowers who now find themselves stuck, unable to pay their mortgages, refinance or sell their homes in a heavily depressed national housing market.

The Wake County Democrat bidding for a fourth straight term representing North Carolina’s 13th Congressional District, was sharply critical of the mortgage lending industry in an interview with The Courier-Times last week while visiting in Person County during the latest congressional recess.

Miller said he has been involved with mortgage lending issues and regulation for the past five years in Congress, and during that time, he charged, mortgage lenders “”have fought any kind of legislation to protect consumers at every step of the way. There’s been no give; there’s been no compromise; there hasn’t been much candor about what’s really going on. So I don’t have much sympathy for them. In fact, I don’t have any sympathy at all.”

Subprime loans typically are high interested loans offered to individuals who can’t qualify for prime loans because of poor credit. In recent years, investment houses have been buying up these loans hoping to profit from the greater interest and fee payments. But then the bottom fell out of the housing market, many borrowers who couldn’t make their payments found they owed more than the value of their homes, so they couldn’t refinance. Foreclosures ensued.

As for the investment houses, Miller said, “They knew exactly what they were doing they knew exactly what the loans were that they were buying. They knew that the homeowners would not be able to pay the loans according to their terms.”

In fact, Miller asserted, “The loans were intended for the homeowners to be unable to pay them. They were intended to catch people in a cycle of having to borrow and then borrow again to get out of the last [mortgage].”

Miller said that between 2005 and 2006, the volume of mortgage loans rose from eight percent to 28 percent of all mortgage loans.

“According to the Wall Street Journal,” he said, “55 percent of the people that had subprime loans qualified for prime loans — for conventional 30-year prime loans. They simply went to the wrong person [for advice]; they trusted the wrong person.”

Given the complicated nature of mortgages, “everyone has to rely upon advice,” Miller observed. “And if you went to the wrong person for advice, you ended up with a subprime loan, regardless of what your credit was.”

According to Miller, about nine in 10 of subprime loans had adjustable rates that adjusted within two or three years with the adjustment ranging from seven to 12 percent, resulting in an increase in the monthly payment of 30 to 50 percent.

“Nobody really thought that the … homeowners really were going to pay the new monthly payment,” Miller said. “But [rather that] when the adjustment happened they would borrow again. They would pay … prepayment penalties to get out of the old loan, points and fees to get into the new loan.” And in those instances, he said, “Instead of a middle class family building equity in a home, the amount of their mortgage just chased the value of their home, and when they got to the point where the amount of the mortgage was just too much to pay, then they would sell their home. They could always sell their home as long as they still had equity in it. [But] What changed was that home values stopped appreciating.

“And all these smart guys on Wall Street, these masters of the universe, who knew exactly what they were doing, who knew exactly what these loans were doing to people, got caught with them,” Miller said.

Miller, whose district includes Person County, went on to say, “The estimates are that two million American families will lose their homes to foreclosure this year and next year. And it was absolutely predictable. In fact, it was intended. Everyone involved in mortgage lending knew the hardship that would result from those loans. They thought the hardship would all be felt by the middle class families, not by Wall Street, not by the lending industry. So I don’t have much sympathy for them at all.”

Miller said he has sponsored legislation, which has passed the House Judiciary Committee, that could help families who meet the financial requirements to file for bankruptcy.

The measure, he said, would permit modification of a home mortgage in bankruptcy on the same terms that bankruptcy courts can now modify any other kind of secure debt, by limiting the amount of debt secured by the asset to the value of the asset. This could help extend the term of the mortgage at a manageable interest rate, he indicated.

“If you bought more home than you could afford, it doesn’t help you, but if you really can afford the home [but] you can’t afford the mortgage that you’ve got on it, it’ll let you come out of bankruptcy with a mortgage that you can afford to pay, and it will have the lender come out of bankruptcy with the mortgage they should have made in the first place,” Miller explained.

He said the Senate is considering similar legislation, which, he claimed, is “vehemently opposed” by the financial services industry.

Regarding the subprime loans, Miller reiterated, “The mortgages that have created the problem should never, ever have been made. There should never have been a president and a Congress and regulatory agencies that were so completely willing to do anything that the financial services industry wanted them to do, and so completely unconcerned about what its’ doing to consumers. Those loans should never, ever have been made.’

Quoting Franklin Roosevelt who said, “Heedless greed is bad morals and also bad economics,’ Miller said, “That was true 75 years ago, and a new generation of Americans is learning that it’s still true.”