On October 8th Senator Clinton announced new initiatives packaged as an Economic Blueprint for the 21st Century: Rebuilding the Road to the Middle Class.
Direct material from her press release is in italics and quotes below.
Housing Proposals
Comment: Mortgage Revenue Bond Use for Refinances, Increase Volume Cap by 25%
Most notable to me from the housing section of her proposal was an expansion of the scope of state revenue bond single family loan programs to explicitly permit their use for refinancing and to expand the mortgage revenue bond volume caps by 25%.
“..Hillary will temporarily modify the Mortgage Revenue Bond (MRB) program to help families refinance unworkable mortgages. 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. Hillary will modify the MRB program in two ways to address the foreclosure crisis: First, state agencies will be permitted to use MRBs to refinance mortgages (under current law, MRB funds can only be used for original mortgages). And second, Hillary will increase the federal cap on the MRB program by roughly 25% to provide an additional $2.5 billion in refinancing capacity. Empowering the state housing agencies to refinance unworkable mortgages would enable them to help low- and moderate income people replace resetting ARMs with stable, fixed-rate loans.”
Expand Fannie and Freddie Caps, and Price Limits
“Implement the “Save Our Homes” program. The Save Our Homes program would temporarily use Fannie Mae, Freddie Mac, and the state housing finance agencies to help reduce foreclosures. The program would be in effect for 2 years. First, Hillary will temporarily increase Fannie Mae and Freddie Mac’s portfolio caps by 5% to give the companies approximately $70 billion in incremental mortgage purchasing capacity. With the caps lifted, the two companies will be directed to work with state housing agencies and private lenders to help at-risk homeowners replace their unworkable mortgages (mostly adjustable rate mortgages) with stable, fixed-rate loans. For example, the companies would help lenders and state agencies set responsible underwriting standards for the new loans; and the companies would also purchase some of these loans for their portfolios.
Implement the “Realizing the Dream” Program. The goal of this program is to ensure that responsible borrowers have access to mortgage credit. At present, banks are reluctant to write new mortgages, and they are especially reluctant to write mortgages that exceed the loan size ($417,000) that Fannie and Freddie purchase. To increase mortgage credit availability, Hillary will temporarily introduce a separate GSE loan limit for high cost areas. The loan limit will be indexed to median area home prices and capped at $650,000. Hillary will also direct Fannie and Freddie to make immediate use of their increased purchasing capacity to add liquidity to the mortgage markets. These actions would be immediately beneficial to credit-worthy middle class families who live in high cost areas and now have difficulty obtaining reasonably priced mortgages."
Foreclosure Related Actions
“The Foreclosure Rescue Fraud Act. An increasing number of people are seeking the aid of “foreclosure consultants” to help them avoid losing their homes. While some of these consultants are legitimate professionals, others are con-artists taking advantage of distressed homeowners. The fraudulent consultants take money from homeowners without providing any actual service, manipulate homeowners into transferring their property deeds to them, or strip the equity from people’s houses. Hillary will pass legislation that sets national, minimal standards of conduct for foreclosure consultants. The legislation would impose criminal penalties on violators, and allows victims to sue for damages. The law would also make $100 million available to states for prosecuting foreclosure rescue fraud and assisting homeowners who have been conned by foreclosure consultants.”
Comment: See my earlier stories on effective tax rates for Fannie and Freddie
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