Lawmakers Request GAO Foreclosure Study

The ranking members of the House Financial Services Committee have asked the Government Accountability Office to conduct a study into the recent surge of foreclosures and promptly report back to the committee.The request by committee chairman Barney Frank, D-Mass., and Spencer Bachus, R-Ala., directs the investigative and auditing arm of Congress to assess the magnitude of the foreclosure problem as well as its causes and possible solutions. "Developing workable solutions to the current problems in the subprime market is a high priority for members of both Houses and both parties, and our committee will be considering legislation on the subject in the coming months," the April 25 letters says. The congressmen also want the GAO to look at the impact of "exotic" and subprime mortgage products on foreclosures, as well as the securitization of these loans. "It seems clear that the type of mortgages that have been offered to borrowers in recent years is one factor, but there is no reason to conclude that it is the only factor," the letter says. "Moreover, even if the types of mortgages recently being offered are the predominant factor, the question is why they have only now begun to lead to higher foreclosure rates."