10/19/2007
WASHINGTON D.C. – Senator John Kerry wrote to Treasury Secretary Paulson, asking him to provide a plan to address the national foreclosure crisis. Today, more than two million American families, including thousands in Massachusetts, risk losing their homes to foreclosure in the near future.
“I’m asking Secretary Paulson to take overdue action now before today’s housing crunch becomes tomorrow’s recession. They need to take aggressive action to save homeowners from foreclosure. So far, the Bush Administration has responded to the mortgage crisis just as they respond to most challenges - they protect their friends first while they play a shell game with those being hit hardest. The steps taken so far only scratch the surface of what the government could be doing to respond. Instead of helping banks and bondholders stay on top at all costs, the Treasury should be ensuring American families do not lose the roof over their heads.”
Only a paltry 1 percent of troubled subprime mortgages have been restructured by lenders. Kerry joined Sheila Bair, Chair of the FDIC, in asking for immediate action to develop a systematic approach for lenders to make loan modifications so creditworthy families can stay in their homes.
Kerry also called to immediately increase the portfolio caps for Fannie Mae and Freddie Mac by ten percent on a temporary basis, to insure that more families get access to fair, non-predatory mortgages. Unfortunately, this has been opposed by the Bush Administration.
Finally, he is pushing Congress to enact legislation to prohibit the most abusive and predatory lending practices that disclosures cannot protect against. Unfortunately, the Bush Administration has also opposed legislation to stop predatory lending.
The text of Kerry’s letter to Paulson is below:
October 17, 2007
The Honorable Henry M. Paulson, Jr.
Secretary
Department of Treasury
15th and Pennsylvania Avenue, N.W.
Room 3330
Washington, D.C. 20220
Dear Secretary Paulson:
I am writing to ask you to take additional steps which I believe are critical to help avert a dramatic increase in home foreclosures in Massachusetts and across the United States.
Owning your own home is the foundation of the American dream. Home ownership encourages personal responsibility, provides financial security, and gives families a stake in their neighborhoods. Unfortunately, more than 2 million Americans—including thousands in Massachusetts—may see that dream crumble as they face impending foreclosure.
I am pleased that the Administration supports legislation to increase loan limits and lower down payment requirements for the Federal Housing Administration. This will increase access to federally-backed mortgages by the lowest-income homeowners. I also appreciate your support for changing the tax code so that families won’t have to pay additional taxes when they’re fighting to keep their homes. These efforts will help many more families in Massachusetts and across the nation find a way out of the abusive loans under which they are currently trapped.
However, I believe there is much more that the Bush Administration can do to head off the increasing numbers of foreclosures expected in the near future. A recent report by Moody’s Investors Service Inc. says that less than 1 percent of subprime home mortgages that are in trouble have been restructured by lenders. This is unacceptable. Sheila Bair, Chairman of the Federal Deposit Insurance Corporation, has said that the current Bush Administration approach to deal with loan modifications on a case-by-case basis is not going to work. To avert a dramatic increase in foreclosures, I ask that you immediately begin developing a systematic program to provide mortgage loan modifications to creditworthy homeowners currently facing foreclosure. I am very disappointed that the Bush Administration has previously expressed opposition to efforts to develop a systematic way to work with lenders to help qualified homeowners to restructure their mortgages and avert foreclosure.
I ask that you immediately support increasing the portfolio caps for Fannie Mae and Freddie Mac by 10 percent on a temporary basis to insure that more families can gain access to fair, non-predatory mortgages. Right now, too many families can’t get a mortgage at a fair price on the open market. Unfortunately, it is my understanding that the Bush Administration is opposed to this common-sense action.
We in government have an obligation to protect the homeowners from predatory lending practices. We should also prohibit the most abusive and predatory practices by lenders that disclosures cannot protect against. Given the crisis we now face as a nation, it is unacceptable that some predatory lenders continue to target the most vulnerable potential homeowners. This will increase foreclosure rates in the future. Specifically, I ask that you support legislation to lower the interest rate and fees that trigger federal consumer protections and prohibit predatory lenders from instituting charges that are unfair to consumers. I am disappointed that the Bush Administration has previously failed to support legislative efforts to halt the predatory mortgage lending practices that increase foreclosure rates and threaten to undermine our efforts to revitalize neighborhoods and expand homeownership opportunities across the country.
We have to help families in Massachusetts and across America find a way out of the abusive loans that now hold them hostage. I believe these efforts will help ease the number of foreclosures, help more families enjoy the benefits of homeownership and help our economy continue to grow.
Thank you in advance for your consideration of this request.
Sincerely,
John F. Kerry
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