Washington, DC – In response to the escalating housing crisis that is devastating communities, shaking our economy, and putting the financial security of millions of families at risk, Senator Hillary Rodham Clinton introduced the Mortgage Refinancing Initiative of 2008 which would provide an opportunity for at-risk households to refinance unworkable mortgages. Newly released data shows that 1.3 million households received foreclosure notices last year. Mounting foreclosures are contributing to the weakness in house prices, and therefore even families who are not at risk of losing their homes are affected. The decline in home prices has already cost families an estimated $1.6 trillion.
“We can reduce foreclosures by helping families replace costly and risky mortgages with stable, affordable ones. Today I am introducing the Mortgage Refinancing Initiative Act of 2008 to help states do just that”, said Senator Clinton.
Senator Clinton’s proposal has been applauded by groups such as the National Association of Realtors who have called Senator Clinton’s proposal a “flexible, timely and much-needed improvement to current law”, that would ensure that “more individuals and families would be able to stay in their homes without the threat of foreclosure.”
The legislation will empower state housing finance agencies to temporarily use the proceeds from tax-exempt bond issuances to help tens of thousands of families refinance unworkable mortgages. Under current law, the state housing agencies can issue tax-exempt bonds to provide affordable mortgages to low- and moderate-income families. Specifically, the legislation will modify the law to permit the agencies to issue up to an additional $10 billion in bonds, over two years, for the purpose of replacing unworkable loans with more stable, affordable ones.
The Mortgage Refinancing Initiative Act is just the latest step Senator Clinton has taken to address the current housing crisis. Since the crisis began last year, she has urged regulators and the mortgage industry to take the necessary steps to end the foreclosure crisis and ensure that it never recurs. Last year she reintroduced the 21st Century Housing Act, which strengthens the Federal Housing Administration (FHA), makes FHA loans available to more Americans, and expands access to a responsible and stable alternative to the subprime market.
She has also introduced the Home Ownership Preservation Act which eliminates abusive lending practices, cracks down on unscrupulous brokers, expands the foreclosure prevention initiatives at Fannie Mae and Freddie Mac, and provides financial assistance to states to expand their foreclosure prevention programs. Senator Clinton has also called on the mortgage industry and Wall Street to observe a 90-day moratorium on subprime foreclosures, a 5-year freeze in rates on subprime adjustable rate mortgages, in addition to calling for $30 billion in assistance to states and communities to fight foreclosures and offset the costs associated with mounting vacancies.