Hillary Clinton's Answer to the Mortgage Meltdown

I wrote this back on December 5, just when we were beginning to learn about how serious the mortgage meltdown was becoming. And now that this mortgage meltdown may take us down into a greater economic crisis, I think this is still a timely issue that needs to be discussed. And by the way, Hillary won't be able to help us get our of this crisis as our next President if we don't make sure that she wins. Please check out Hill's new MyPA page to not only help Hillary win Pennsylvania, but also tell the campaign how you'd like your money to be spent. Awesome, isn't it?

But anyways, on to the feature presentation... ;-)

I think we all know now how serious the mortgage crisis is becoming. People are losing their homes. Builders don't know if they can build more homes. Here in my neck of the woods in Southern California, our entire economy is being affected, and we just don't know if we'll be seeing any relief any time soon. So what can be done? How do we start to fix this mess in real estate?

Enter Hillary Clinton:

"Mortgage lenders didn't have balance sheets big enough to write millions of loans on their own. [...] Wall Street originated and packaged the loans that common sense warned would end in foreclosure. Some people might say Wall Street only helped distribute risk. I say, Wall Street shifted risk away from the people who knew what was going on and onto the people who didn't."

Yep, Hillary was at the NASDAQ MarketSite today to talk about this problem. Oh yes, and she also talked about solutions. Want to see
what Hillary's proposing?

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.

Wow, that sounds like a clear plan of action! But wait, how exactly will this affect us? How will Hillary's solutions provide real help for us? Well, as Hillary recently wrote in a letter to Treasury Secretary Henry Paulson, our economic slump will only worsen if we don't do something about the mortgage crisis. 1.8 million foreclosure notices have been sent out so far this year, which is an increase of 74% from 2006. Now think about that for a moment. 1.8 million people losing their homes this year? And all because they were suckered into a bad deal that could never work?

OK, so let's get back to Hillary's plan of action. In her letter to Henry Paulson, Hillary outlined a plan of action that she would take if the Bush Administration does not take the three steps she mentioned earlier. Let's see what she says:

I will consider legislation that enables lenders to convert unworkable mortgages into stable, affordable loans without the permission of investors. Protection from lawsuits will remove the obstacle that keeps lenders, servicers and others from turning mortgages that were designed to fail into mortgages families can afford. Right now, servicers who process monthly loan payments and interface with homeowners have flexibility to modify loans. However, they are reluctant to fully exercise this discretion in part because they fear investor lawsuits. Investors who own the securities into which the mortgages have been packaged may assert that they are harmed when servicers help at-risk borrowers. Protection from lawsuits could enable the servicers to help homeowners avoid foreclosures, help investors avoid the losses they would otherwise suffer, and help the economy. [...]

A fund of up to $5 billion to help hard-hit communities and distressed homeowners weather the foreclosure crisis. The fund will support initiatives by states, cities, and community groups to reduce foreclosures, and to help cities cope with the financial and social costs associated with an increase in vacant properties. The fund will provide a much-needed boost to communities already feeling the effects of the economic downturn. [...] Financial counseling can cost as little as $3,000 per household, while each foreclosure costs a local community $227,000 when the harm to surrounding property values is included. Foreclosure prevention is more critical than ever. The concentration of foreclosures in particular neighborhoods has a negative ripple effect on communities. It leads to higher rates of crime, lower tax revenues, and lower property values. Low-income communities are especially at risk. Risky subprime loans are three times more likely in low-income neighborhoods than in high-income ones. [...] The foreclosure crisis threatens to undo the gains in minority homeownership rates. Lawsuits have been filed against mortgage lenders alleging discriminatory practices. Regulators should be especially attentive to these concerns.

My goodness, Hillary certainly knows her stuff when it comes to the real facts on the mortgage crisis and what needs to be done to solve it. But wait, you'd like to see some more? Well, you can always check out Hillary's page on the mortgage crisis. Over there, you can find out more about Hillary's ideas on how to protect the American Dream of becoming a homeowner.

After all, if we want real solutions to this real problem hurting working families and their dream of owning their own home, shouldn't we have a President that's strong enough to lead on Day One? Hillary understands that the problem is more than just subprime mortgages. It's about people losing their homes. It's about workers in every sector from mortgages to construction losing their jobs. It's about a serious economic issue that can't be ignored any longer. And guess what? Hillary knows what to do, and she'll be ready to act and solve this problem.

Think about it. Isn't it time we have a President who cares about our concerns? Isn't it time that we have a President who doesn't just talk about the problems we face today, but also make solutions happen? :-) ...... Oh yes, and btw... Here's Hill's NEW ad up in Pennsylvania taking on the economic crisis... Yet another reason to check out the the MyPA page and see how you can help put this ad on the air all over the state! :-)

Tags: economics, Election 2008, foreclosures, Hillary Clinton, mortgage meltdown, Pennsylvania, Wall Street (all tags)



Tips? Flames? Suggestions?

You know what to do! ;-)

by atdleft 2008-04-05 11:02AM | 0 recs

I just found out that my friend, the one who insures her two kids but not herself, is now in that fix.  There were lots of cheaters helping her. First she'd bought a house she lived in 11 years, but it was too close to the freeway and her youngest son was always being hospitalized for asthma .  His doctor told my friend she needed to move him away from car fumes.  So they rented that house cause it wasn't selling and got another one.  When she managed to sell her house, she was socked with a big tax payment because she had an incompetent tax preparer. That started her debt problem, and along with repairs to the new home and out-of-pocked medical expenses, she's going to have to file bankruptcy and she'll lose her house. After working as a house cleaner for twenty years, she has nothing to show but debt and stress.  She's never taken a dime from the government and she's always paid her taxes (more than she's actually owed, turns out) and what has she paid for? No consequences for those who took her to the cleaners.  Hillary says that predatory lending is criminal.  There are too many vultures waiting to rip off poor yet trusting people.  Those are the one's who've helped so many into impossible debt and now have created a recession for us.  I guess it takes another woman to realize this tragedy is wrong, not just a sucker born a minute, but institutionalizing sharks to create more suckers.  

by anna shane 2008-04-05 11:46AM | 0 recs
Re: Suggestions?

It also takes another CLINTON to clean up after a Bush. Hillary will get the job done.

by KnowVox 2008-04-05 06:08PM | 0 recs
Anna -

She has recourse.  She can file an amended return I believe.  Has she talked to the IRS?  Probably  - It's hard to believe she can't fix this.  What about free legal clinics?  They're difficult to find because they're swamped - universities sometimes have clinics.

It's a sad business -  

by Xanthe 2008-04-06 04:12AM | 0 recs
Re: Hillary Clinton's Answer

Well done atdleft. Thanks.

by durendal 2008-04-05 11:08AM | 0 recs
Re: Hillary Clinton's Answer

I live in a seriously over inflated real estate market that has been hit hard by the mortgage crises. Hillary is the only one making sense on how to go forward.

by linfar 2008-04-05 11:11AM | 0 recs

Hillary always makes so much sense... Even when she's talking economics, which may not always make sense. ;-)

by atdleft 2008-04-05 11:34AM | 0 recs
I think converting the loans to longer term loans

is the best all around solution to lower people's monthly payments. Also, there should be a limit on the interests rates that these loans can charge, pegged to a reasonable margin above the prime rate. If the lenders can't deal with that, let THEM fail. They should have realized they would not get away with this.

We also need to aggressively work on keeping jobs in the US and bringing more new work here. The business management gurus keep saying that we don't want to be doing this kind of work or that kind of work in the US because it isn't profitable enough but they are not looking at the big picture, we need those jobs or our society falls apart. Perhaps we need to schedule a national conference on work, economic development and the future and bring people to it from all segments of the economy to help brainstorm a plan to keep America working and prosperous in the 'post-industrial age'.

by architek 2008-04-05 02:46PM | 0 recs
What is this "Voluntary" stuff?

Why on earth does Clinton think she can sweet-talk Wall Street into giving away money with these "voluntary" measures?  It's seems completely ridiculous to me.  If they were willing to do it on their own, why haven't they done it already?

This seems like "just talk" to me.

by OaktownDad 2008-04-05 01:41PM | 0 recs

I think you're confusing Hillary with someone else.

by atdleft 2008-04-05 02:28PM | 0 recs
Obama voted against a measure the Democrats were

trying to get passed that would have pegged interest rates at 30%

So we know how he REALLY feels about this issue.

by architek 2008-04-05 02:47PM | 0 recs

I guess I'm too polite. Glad to see you weren't afraid to point out this "discrepancy". ;-)

by atdleft 2008-04-05 03:01PM | 0 recs
Interesting article on 1994 healthcare wars..

This one is also really worth reading..  Its about Jim Cooper and the huge amount of support he received in 1994 from the people who wanted to kill universal healthcare..

its FROM 1994  Highly recommended..

http://query.nytimes.com/gst/fullpage.ht ml?res=9B00EEDD1431F93AA25757C0A96295826 0&sec=&spon=&pagewanted=all

by architek 2008-04-05 04:54PM | 0 recs
Re: Obama voted against a measure the Democrats we

That was related to credit card interest only.  He said it was too high.  What's that got to do with HRC's toothless "voluntary" housing "plan"?

by OaktownDad 2008-04-05 03:08PM | 0 recs
30% is awful high...

did he vote for a lower cap, though? NO

by architek 2008-04-05 04:55PM | 0 recs
Re: 30% is awful high...

Whatever.  How does this make HRC's "plan" to "challenge" Wall Street to voluntarily give away their money anything more than a pipe dream?

by OaktownDad 2008-04-05 08:15PM | 0 recs
it included other unsecured credit
such as check cashing places that charge somewhere in the neighborhood of 120% apr.
by linc 2008-04-05 10:14PM | 0 recs
Re: Huh?

Read exactly what she is proposing:  the only thing even close to a short-term fix is a "challenge" to wall street to "voluntarily" give up some of their own money.

Who is dreamy-eyed on this one?

by OaktownDad 2008-04-05 03:01PM | 0 recs
Excellent diary

The reason I support Hillary is that she has precise plans to handle every crisis that is confronting our country.  The country has so many problems and Hillary has really stepped to to address each of them.

Thank you for the diary.  Recommended.

It is excellent.

by macmcd 2008-04-05 01:46PM | 0 recs
Thank You...

I also appreciate Hillary's willingness to propose real solutions to the problems we're facing. This just proves she's ready to take on this job. :-)

by atdleft 2008-04-05 02:30PM | 0 recs
Is this snark or straight.

If Straight, diary is absurd as Hillary's solution, which would make the taxpayers the co-signers for those irresponsible/shrewd participants in this gigantic ponzi scheme.

If satire, you got to be clearer

by arodb 2008-04-05 02:04PM | 0 recs
I don't think the taxpayers should co sign..

Quite a few of the houses out there in foreclosure are abandoned. Many were bought on speculation. Whatever we do, it should only apply to owner-occupied housing or housing that is being rented by low income people that is not substandard or involved in the process of cleaning it up. What I am saying is that the US government and taxpayers should not be helping the Rezko-like slumlords.

by architek 2008-04-05 02:51PM | 0 recs
I meant that if it was being rented and

subject to mild code violations BUT the landlords WERE cleaning it up, people should not be evicted.

by architek 2008-04-05 02:53PM | 0 recs
Re: Hillary Clinton's Answer to the Mortgage Meltd

I like that she is taking the mortgage crisis seriously however I have real doubts about it when her campaign manager received financial compensation for her consulting work with one of the companies responsible for awful lending practices and that she wants to have Alan Greenspan involved in this is really unfortunate on so many levels.

Here are some links to back up my above thoughts:  

http://latimesblogs.latimes.com/laland/2 008/03/hillary-clinton.html
http://firedoglake.com/2008/03/24/clinto n-let-greenspan-decide-whether-to-rescue -home-owners/

Great post though.  Whoever the nominee is, this is going to be one of the bigger issues they are going to be faced with.  Whoever the nominee is will definitely have a better solution than John McCain.

Its really frustrating that the serious people who always get it wrong are always the ones who are continually offered a platform (not saying Hillary Clinton is always wrong, this is more of a reference to people like Alan Greenspan.)

by jakedecker 2008-04-05 02:22PM | 0 recs
Excellent diary! Good work.

I'm constantly reminded of why "Solutions for America" is such an apt slogan for Hillary's campaign.

by sricki 2008-04-05 03:14PM | 0 recs
Re: Hillary Clinton's Answer to the Mortgage Me

What I do not see is a real solution - educatging our citizens in not being stupid enough not to understand what an ARM is. While there are legitimate victims, most of them seem to be people who gambled on an ARM.

The BEar Stearns bailout was horrible considering it came without any conditions forcing execs at that firm to limit their compensation if they wanted the company to get any federal assistance.

Now we are excusing a lot of people for gambling.

And then there are people so overwhelmed with fine print, I can understand why they don't have the energy to read every single term on their agreements. The legal system is responsible for 30 page long agreements we need to sign for every single lease or agreement. Do people even have time to read all that fine print?

by Pravin 2008-04-06 05:46AM | 0 recs


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