Loans Expert

As Congress dives into one of its first big post-spring recess issues — financial reform — Sen. Carl Levin kicked off the final leg of the largest investigation on Capitol Hill into what caused the near collapse of the nation’s financial system.

Levin, D-Detroit, on Tuesday launched hearings by the Senate Permanent Subcommittee on Investigations that focused on high-risk mortgages given by banks to homeowners who either weren’t aware of loan terms that resulted in skyrocketing payments or couldn’t initially afford the terms. Levin chairs the committee.

The nation’s leading consumer banks gave a grim assessment of the mortgage industry today in testimony on Capitol Hill. Chief among them was Bank of America’s head of home loans who said a “considerable number of customers” will lose their homes in the next two years.

Hundreds of thousands of Bank of America customers haven’t made a mortgage payment in more than a year. And more than a million others are at least two months behind in their payments.

Only a small fraction of Bank of America customers have had their mortgages modified to make payments more affordable.

The nine top U.S. banks that received government rescue funds in January made the fewest amount of new loans since October, government data showed on Monday.

Loan originations at the nine top banks that received bailout money from the Troubled Asset Relief Program fell to $35.9 billion in January, down $19.3 billion from December levels, Treasury said in its monthly TARP lending survey of the top banks.

It was the smallest amount since October when they hit $41.6 billion. October was the last month that new loans had fallen.