Hillary Clinton Statement On Treasury Secretary Paulson's Comments at Housing Conference

"According to news accounts, Treasury Secretary Paulson said that the Administration is putting forward a proposal, as part of its response to the foreclosure crisis, to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancing.

"I think this is an excellent idea that the administration should have been adopted two months ago when I proposed it.

"The Mortgage Revenue Bond program (MRB) needs to be modified to help families replace unworkable adjustable rate mortgages with stable, fixed-rate loans. Under the MRB, state housing finance agencies use the proceeds of tax-exempt bond issuances to provide low-cost mortgages to low- and moderate-income families. I proposed to modify the program in two ways to address the foreclosure crisis: First, state agencies would be permitted to use MRBs to refinance mortgages (under current law, MRB funds can only be used for original mortgages). And second, I would increase the federal cap on the MRB program by roughly 25% to provide an additional $2.5 billion in refinancing capacity.

"Policies like my MRB proposal are desperately needed right now. The foreclosure crisis is harming families, communities, and the economy.

"This morning I wrote to Secretary Paulson to insist that the Administration and the mortgage industry quickly fashion an agreement to end this crisis. I informed the Secretary that a satisfactory agreement must do at least three things:

• Impose a foreclosure moratorium of at least 90 days on subprime, owner-occupied homes.
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• Freeze the monthly rate on subprime adjustable rate mortgages, with the freeze lasting at least 5 years or until the mortgages have been converted into affordable, fixed-rate loans.
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• Require the mortgage industry to provide status reports on the number of mortgages it has modified.
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"If the Administration fails to produce an agreement adequate to the scale of the problem, I will consider legislation that enables lenders and servicers to convert unworkable mortgages into stable, affordable loans without the permission of investors."