Hillary Clinton Press Releases addressing the Housing Crisis during the 2008 Campaign
3/24/2008
Hillary Clinton's Plan to Protect American Homeowners
Impact for African American Families and Communities
Today, Senator Clinton announced her plan to protect American homeowners from the growing housing crisis, which threatens to drive our economy into a painful downturn. The housing crisis has a disproportionate impact on African-American families, and threatens to set back the gains in homeownership among African-Americans that we have seen over the past decades.
"Over the past week, we’ve seen unprecedented action to maintain confidence in our credit markets and head off a crisis for Wall Street Banks. It’s now time for equally aggressive action to help families avoid foreclosure and keep communities across this country from spiraling into recession,” said Clinton. “The solution I’ve proposed is a sensible way for everyone – lenders, investors, mortgage companies and borrowers - to share responsibility, keep families in their homes, and stabilize our communities and our economy."
There is a significant impact in the African American community, consider:
Fifty-two percent of mortgages to African-American families in 2006 were subprime loans, compared with 22 percent for white families. [Center for Responsible Lending, 2007]
African-American borrowers were 2.7 times more likely to be issued a high-cost loan and 1.8 times more likely to be issued a high-cost refinance loan than white borrowers. [ACORN, 2007].
African-American women are particularly at risk: they received subprime mortgages at the highest rate of any demographic group - despite having slightly higher credit than their male counterparts. [Consumer Federation of America, 2006]
Senator Clinton has been speaking out for over a year on the need to take action to address our housing crisis, and has been out in front in calling for major reforms: from cracking down on unscrupulous mortgage lenders to establishing a 90-day moratorium on foreclosures and a five-year interest rate freeze on subprime mortgages. After more than a year of downplaying the problems in our housing market and criticizing Senator Clinton’s proposals, the Bush Administration now says it is willing to consider more aggressive action. But the time for mere consideration has passed. That’s why today Senator Clinton proposed a new plan to protect American homeowners. Her efforts will directly help African American families and communities:
Senator Clinton’s new action to help at-risk homeowners restructure their mortgages will help African-American families stay in their homes. Senator Clinton believes we should extend the Federal Housing Administration’s (FHA) capacity to guarantee restructured mortgages as proposed by Rep. Frank and Sen. Dodd, and that the government should stand ready to play a more proactive role in purchasing, restructuring, and reselling underwater mortgages. These steps will help hundreds of thousands of African-American families avoid foreclosure and maintain the value of their homes.
Senator Clinton’s $30 billion fund for states and localities will help African-American communities fight the foreclosure crisis in their neighborhoods. Senator Clinton understands that communities with high rates of subprime lending and mounting foreclosures are at risk of falling into devastating downward economic spirals. She believes that if we can extend a $30 billion lifeline for a Wall Street bank, we should be able to extend $30 billion to help these communities stem the impact of mounting foreclosures. Subprime lending has been particularly prevalent in majority African-American communities. In New York City, for example, 46 percent of mortgages in the African-American neighborhood of Jamaica, Queens, were subprime, compared to just over 3 percent in mostly-white Bay Ridge, Brooklyn – despite nearly identical median household incomes. As foreclosures mount, Senator Clinton’s $30 billion lifeline can be used to buy and rehabilitate foreclosed properties and ward off blight. Senator Clinton is committed to providing these neighborhoods with tools they deserve to weather the storm as the mortgage crisis deepens, including:
Supporting Efforts to End Discriminatory Lending Practices. There is substantial evidence of discriminatory lending practices in the subprime industry. As one lawyer from the NAACP observed “it’s almost as if subprime lenders put a circle around neighborhoods of color.” Senator Clinton’s $30 billion fund will provide support for community-based efforts to investigate and pursue claims against discriminatory lending practices.
Encouraging Responsible Borrowing. Senator Clinton’s $30 billion housing stimulus will also support homeowner counseling and education programs to make sure families have the information they need to make the right decisions. Fannie Mae and Freddie Mac have estimated that between one-third and one-half of all subprime borrowers could have qualified for prime mortgages.
3/24/2008
FACT CHECK: Sen. Obama Accepts Over $1 Million From Subprime Lending Industry
The Obama campaign’s response to the comprehensive plan Hillary laid out to address the housing crisis today was not to discuss their disagreement with her proposal but to assert that Hillary has received contributions from subprime loan companies.
Considering that Sen. Obama has received $1.18 million from subprime lenders and has taken more campaign contributions from the top ten issuers of subprime loans, that attack rings hollow as just words. Sen. Obama has a record of talking about standing up to special interests and then caving to their demands. Hillary has a 35-year record of standing up to special interests and delivering results.
Obama has taken $1,180,103 from the top issuers of subprime loans. [cq.com]
Obama received $266,907 from Lehman. [Cq.com]
Obama received $5395 from GMAC. [Cq.com]
Obama received $150,850 from CS First Boston. [Cq.com]
Obama received $11,250 from Countrywide. [Cq.com]
Obama received $9052 from Washington Mutual. [Cq.com]
Obama received $161,850 from Citigroup. [Cq.com]
Obama received $4600 from CBASS. [Cq.com]
Obama received $170,050 from Morgan Stanley. [Cq.com]
Obama received $1150 from Centex. [Cq.com]
Obama received $351,900 from Goldman Sachs. [Cq.com]
Sen. Obama has taken more money from the top 10 issuers of subprime loans than Hillary. Sen. Obama has received $434,420 from the top 10 issuers of subprime loans. Hillary has received $364,950. [Cq.com; USA Today]
December 5, 2007
Hillary Calls On Wall Street To Address Housing Crisis
Hillary goes to the Nasdaq stock exchange today to call on Wall Street to help clean up the housing foreclosure crisis it helped create. Wall Street not only enabled reckless mortgage lending, it encouraged it - 1.8 million home foreclosure notices have been filed this year, a 74% increase from 2006. Now it’s time for lenders, homeowners and investors to come together to solve this crisis and stem the tide of foreclosures.
Hillary will challenge lenders and financial institutions to take three immediate steps today: 1) Voluntarily support a moratorium of at least 90 days on home foreclosures; 2) freeze the fluctuating rates on subprime loans for at least 5 years until they can be converted into fixed rate, affordable loans; 3) Require regular status reports on the progress they’re making in converting unworkable mortgages into loans families can afford so we have real accountability.
Hillary is proposing a comprehensive work out - not a bail out - that would end the foreclosure crisis. If Wall Street refuses to act, Hillary will propose legislation to tackle the problems in the housing market head on.
As we see growing economic challenges - from the housing crisis to rising energy costs-- it’s clear that we need a leader with Hillary Clinton’s strength and experience to create the change America needs. Hillary has proposed allocating up to $5 billion in immediate assistance to help communities and distressed homeowners weather the foreclosure crisis, and called for $1 billion in emergency energy assistance for families facing skyrocketing heating bills this winter.
FORECLOSURE MORATORIUM: Hillary will call for a moratorium on home foreclosures of at least 90 days so that a rate freeze can take effect and at-risk homeowners can get financial counseling to help them transition to affordable loans.
FREEZE ADJUSTABLE RATE LOANS: The rate freeze must last at least 5 years, or until subprime mortgages have been converted into affordable loans. A typical subprime adjustable rate loan is raising monthly payments by 30% to 40% for many families, causing a wave of housing defaults across the country.
REQUIRE ACCOUNTABILITY: Hillary will ask for regular status reports on the progress Wall Street is making in converting unworkable mortgages into loans families can afford.
August 7, 2007
Hillary Clinton Announces Plan to Address Mortgage Lending Abuses; Preserve Dream of Home Ownership
DERRY, NH - With foreclosure rates continuing to skyrocket across the country, Senator Hillary Clinton in Derry, NH today laid out a plan to preserve the American dream of home ownership that would crack down on unscrupulous brokers, curb mortgage lending abuses, assist families facing foreclosure and expand affordable housing options.
"Today, we have a choice. We can look at the statistics, wring our hands, and continue to do nothing, or we can do what America has always done in times of difficulty: acknowledge that we face a real challenge, and confront it head-on with real solutions," said Clinton. "I think the choice is clear. I think we need to act now, with smart, practical solutions to strengthen our housing and mortgage markets. If I were President, I would address abuses across the mortgage industry with a plan to curb unfair lending practices and hold brokers and lenders accountable, give families the support they need to avoid foreclosure, and increase the supply of affordable housing."
New Hampshire resident Kristi Schofield joined Senator Clinton in Derry today. On July 31st, Kristi and her husband Paul lost their home of eight years in East Hamstead, NH because it had been purchased by the bank at a foreclosure auction. Yesterday, their mortgage company asked them to be out of the house in 17 days. They had planned to raise their three children and spend the rest of their lives in their home, but their adjustable rate mortgage payments continued to climb from $2,400 to its current level of $6,000 a month.
"We tried to do the right thing and continued to make the payments as long as we could with our savings and what earnings we had from unemployment, temporary and part time work. My husband had a good job, we had a great home. We were living our dream. Hillary Clinton is standing up today because she wants to help protect the American dream," said Schofield.
Earlier in the year, the problems in mortgages seemed limited mostly to subprime loans. According to the New York Times, nearly 14 percent of subprime borrowers were delinquent in the first quarter. Now, there is increasing evidence that problems have spread beyond just subprime mortgages. There were 1.3 million foreclosures last year, and there have been more than 900,000 foreclosure filings so far this year. In New Hampshire, there were approximately 150 foreclosure filings last year, but there were more than 1,400 in the first six months of this year. The home is the largest asset most people have. The loss of it affects everything from people's economic security, to their retirement plans, to their ability to pay for their children's education.
To make matters worse, home prices are weakening and sales have slowed. It would now take almost nine months to work off the inventory of unsold homes. And this growing problem with mortgages may be limiting access to credit for middle class families. The Wall Street Journal recently reported that "jittery home-mortgage lenders are cutting off credit or raising interest rates for a growing portion of Americans . . ." This threatens to become another hurdle to home ownership, the greatest source of wealth for average Americans.
"We need to put an end to fly-by-night mortgage brokers peddling loans to unqualified applicants based on inflated appraisals. We need to help those facing the pain of foreclosure. We need to secure the marketplace and put reforms in place right now," said Clinton.
Protecting The Dream Of Home Ownership
Senator Clinton's plan will curb mortgage abuses, assist families facing foreclosure, and expand affordable housing to protect the American dream of home ownership. She will introduce her plan when Congress returns in September.
Crack Down on Unscrupulous Brokers:
Require mortgage brokers to disclose to borrowers that their compensation rises when borrowers' mortgage rates and mortgage fees are high. Too many prospective homebuyers believe that the mortgage broker is acting on their behalf. In fact brokers earn more when they steer borrowers to mortgages with higher rates and fees. The broker's and borrower's interests are not always aligned. Borrowers need to be aware of this when assessing the advice brokers give them. To address this need, Hillary will require that brokers disclose to borrowers how they are paid.
Work with states to develop strong licensing standards and require federal registration for mortgage brokers. Unscrupulous brokers have steered people into high cost mortgages, qualified them for loans they could not afford, and attached fees unnecessarily. These brokers are responsible for many of the lending abuses that occurred in recent years, but there is no single, national source for information about individual brokers. Hillary will establish national registration for brokers so that prospective borrowers can easily look up a broker's employment history, violations, complaints, and other information. As President, she will also work with the states to develop strong licensing standards to ensure that mortgage brokers are qualified and properly screened.
Crack Down on Mortgage Lending Abuses:
Eliminate prepayment penalties on mortgage products. Prepayment penalties, which are often used on subprime, Alt-A, and non-traditional mortgages, are a problem for borrowers. These penalties can lock borrowers into loans until the rates and monthly payments escalate. Families should not be discouraged from responsibly paying off their mortgages early, particularly when this would allow them to avoid balloon payments or high floating rates. Studies have shown that loans with prepayment penalties have a 52% greater risk of default than those without. Hillary will restrict the use of prepayment penalties.
Require mortgage lenders to include the cost of taxes and insurance in the underwriting assessment of higher-risk mortgages. Many borrowers fail to consider taxes and insurance costs when weighing whether they can afford a particular mortgage. Sometimes, lenders exclude those costs from the underwriting assessment, and in the process qualify people for mortgages they cannot afford. Hillary will require that taxes and insurance costs be included in the underwriting assessment so that prospective homeowners can properly determine whether they can afford a particular house. This requirement would apply to subprime mortgages, Alt-A mortgages, and non-traditional mortgages like interest-only, no-money-down, and payment option ARMs.
Help Reduce Foreclosures:
Establish a $1 billion fund to assist state programs that help at-risk borrowers avoid foreclosure. Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.
Expand Fannie Mae's and Freddie Mac's Foreclosure Prevention Efforts. Hillary would expand the goals of Fannie and Freddie, the government sponsored enterprises (GSEs) that help stabilize the mortgage markets, to include helping a larger number of at-risk homeowners avoid foreclosure. This would be consistent with Fannie's and Freddie's existing goals that promote home ownership. The GSEs already help mitigate foreclosures by enabling some borrowers to swap into less risky, lower-cost loans. Fannie also helps homeowners arrange payment forbearance, financial counseling, and loan restructurings. Hillary will expand those initiatives to make foreclosure mitigation a greater priority.
Expand Affordable Housing:
Establish a $1 billion fund to provide federal support to housing trust funds established by state, county, and municipal governments. The rise in home prices over recent years, coupled with stagnant wages, has meant that people are committing an increasing share of their salaries to mortgage payments. Between 2001 and 2004, for example, the number of households paying more than half of their incomes on housing increased by 1.9 million. The Joint Center for Housing Studies estimates that housing is a "severe cost burden" for 15.6 million low- and middle-income households. Families facing such strains often forgo necessities. Other families simply forgo home ownership, or turn to high risk, alternative mortgage products. In order to encourage the development of affordable housing, Hillary will establish a $1 billion fund to support state, county, and municipal housing trust funds. Housing trust funds generally use dedicated funding sources to support initiatives like building subsidized rental housing and safety net housing, and they also support nonprofit housing developers. Hillary's fund will supplement the funding states, counties, and municipalities have already dedicated to these initiatives.
The plan announced today supplements the plan Hillary announced earlier this year to address the problems in subprime mortgages. In that earlier announcement, Hillary called for expanding access to independent face-to-face counseling; restricting prepayment penalties for subprime mortgages; requiring "plain-talk, no-fine-print disclosure"; promoting "foreclosure timeout" in which at-risk borrowers and lenders work out alternatives to foreclosure; and strengthening the Federal Housing Administration so that it could provide more homebuyers with an alternative to the subprime market.
