Senator Clinton Wants Foreclosure Moratorium Now

Posted on December 6th, 2007 by hinson

Senator Hillary Clinton wants more than just the Presidency. She also proposed a 90-day moratorium on home foreclosures last Monday so that troubled homeowners have additional time to try and work out their difficulties with their lenders. Senator Clinton outlined her proposal to U.S. Treasury Secretary Henry Paulson who is in the midst of brokering a deal with mortgage lenders to accomplish a similar purpose.

The cuurent crisis arising from sub prime adjustable rate mortgages which were provided to homeowners with questionable credit standings has shaken financial markets, contributed to a decline in property values and has led some economists to fear an imminent recession unless a fast solution is enacted.

Clinton told Paulson that it is critical that this crisis be addressed now and that the mortgage industry has to reach an agreement that is equal to the scale of the problem. She added that any agreement that isn’t adequate or fails outright will have an incalculable cost to the U.S. economy.

Treasury Department Secretary Paulson has been steadily urging the mortgage industry to agree to freeze interest rates for some homeowners who took out ARMs with low teaser rates that will soon reset to much higher, unaffordable rates and monthly payments. More than 2-million such loans are estimated to be facing resets between now and the end of 2009.

Clinton also said that any agreement should include at least a 90-day moratorium on foreclosures on owner-occupied homes with sub prime mortgages. Any agreement should also include a rate freeze on ARMs of at least five years or until the loan is converted into a traditional fixed-rate mortgage.

Senator Clinton added that she believed such a freeze would permit the housing market enough time to stabilize while it also gives homeowners time to rebuild their equity. She also called upon the mortgage industry to generate regular reports on the number of mortgages that they have modified. Finally, Senator Clinton said that if the administration fails to secure an agreement that includes those provisions, she would have no choice but to push for new legislation that would allow lenders to convert sub prime loans into more affordable loans without permission from the investors who bought them as bundled products. She also asked for $5-billion with which to aid hard-hit US communities and to help homeowners cope with the foreclosure crisis.

The current sub prime crisis has hit some states harder than others including California, Nevada, Florida, Michigan, Ohio and Indiana which are key states in next year’s presidential elections.

President Bush is also predicated to address the nation and announce some of the adminstration’s solutions on Thursday, December 6^th. This will undoubtedly include Treasury Secretary Paulson’s plan, possibly a reform of the Federal Housing Adminstration and other possible aids proposed.