Dec

4

Treasury Secretary Henry Paulson Speaks On Housing Part 2

Filed Under Adjustable Rate Mortgage, Foreclosure Market, Housing Market, Housing Videos, Mortgage Defaults, Mortgage Delinquencies, Mortgage Implosion 
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Transcript(available for convenience purposes - we do not guarantee accuracy
REACHING HOMEOWNERS IS ONLY PART OF THE EQUATION. THE SECOND PART OF OUR ACTION PLAN IS TO MAKE MORE PRODUCTS AVAILABLE FOR BORROWERS WHO HAVE THE FINANCIAL WHEREWITHAL TO OWN A HOME BUT ARE STRUGGLING WITH A HIGHER ADJUSTED RATE ON THE SUBPRIME MORTGAGES. TO HELP WITH THIS, THE INDUSTRY IS LOOKING AT SEVERAL INNOVATIVE SOLUTIONS, INCLUDING BOTH MODIFICATIONS OF REFINANCINGS. STATE AND LOCAL GOVERNMENTS, ESPECIALLY IN THE HARDEST-HIT AREAS, ARE ALSO DEVELOPING SOLUTIONS, INCLUDING PROPOSING FUNDS THAT MAY HELP FINANCIALLY ABLE BORROWERS REFINANCE OUT OF EXPENSIVE SUBPRIME LOANS. GIVEN LOCAL NATURE OF THE HOUSING MARKET, STATE AND LOCAL SOLUTIONS CAN BE PARTICULARLY AFFECTED. CURRENT LAWS ALLOW STATES AND LOCALITIES TO ISSUE TAX-EXEMPT BONDS ONLY TO ASSIST FIRST-TIME HOME BUYERS OR HOME BUYERS IN DESIGNATED IS STRESSED AREAS. SOME STATE HOUSING AGENCIES HAVE INITIATIVE PILOT PROGRAMS BACKED BY TAXABLE BONDS TO BUILD REFINANCE STRUGGLING SUBPRIME BORROWERS INTO MORE AFFORDABLE MORTGAGES. TODAY, WE ARE PROPOSING TO ALLOW STATE AND LOCAL GOVERNMENTS TO TEMPORARILY BROADEN THEIR TAX- EXEMPT BOND PROGRAMS TO INCLUDE MORTGAGE REFINANCINGS. IF ENACTED, THIS WILL REDUCE THE COST OF INNOVATIVE — INNOVATIVE MORTGAGE PROGRAMS AND ALLOW THEM TO REACH MORE STRUGGLING HOMEOWNERS. WE IN THE FEDERAL GOVERNMENT ARE ALSO TAKING STEPS. THIS FALL, BUT INITIATED FHA SECURE TO GIVE IT MORE FLEXIBILITY TO ALLOW FAMILIES TO STAY IN THEIR HOMES, EVEN THOSE WHO HAVE GOOD CREDIT BUT MAY HAVE NOT MADE ALL THEIR MORTGAGE PAYMENTS ON TIME. AN ESTIMATED 240,000 FAMILIES CAN AVOID FORECLOSURE BY REFINANCING THEIR MORTGAGES CMBREAKPOINT UNDER THE FHA SECURE PLAN. THE ADMINISTRATION IS TAKING ACTION TO HELP HOMEOWNERS AND CONGRESS MUST DO THE SAME BEFORE IT LEAVES THIS YEAR. SINCE AUGUST, THE PRESIDENT HAS BEEN CALLING ON CONGRESS TO PASS HIS AT AGE A MODERNIZATION PROPOSAL, WHICH, BY LOWERING THE DOWN PAYMENT REQUIREMENT AND INCREASING THE LOAN LIMIT AND ELLEN RISK-BASED PRICING WILL MAKE AFFORDABLE FHA LOANS MORE WIDELY AVAILABLE. THE ADMINISTRATION’ S PROPOSED BILL WOULD HELP REFINANCE ANOTHER ESTIMATED 200,000 FAMILIES INTO FHA-INSURED LOANS. SINCE AUGUST THE PRESIDENT HAS ALSO CALLED ON CONGRESS TO PROVIDE TAX RELIEF, HOMEOWNERS AND WILL FINALLY FIND RELIEF SHOULD NOT GET PUT BACK IN FINANCIAL STRAITS BECAUSE OF THE TAX CODE. ADDITIONALLY, CONGRESS NEEDS TO COMPLETE ITS WORK AND CREATE A STRONG INDEPENDENT REGULATOR FOR FANNIE MAE AND FREDDIE MAC. FANNIE MAE AND FREDDIE MAC HAVE AN IMPORTANT ROLE TO PLAY IN MAKING MORTGAGE IS AVAILABLE AND AFFORDABLE. APPROPRIATE REGULATORY OVERSIGHT IS CRITICAL TO THEIR ABILITY TO SERVE A PUBLIC POLICY PURPOSE. THE THIRD ELEMENT OF OUR PLAN INVOLVES A PRAGMATIC RESPONSE TO THE REALITY OF THE NUMBER OF HOMEOWNERS STRUGGLING WITH THE RESETTING SUBPRIME MORTGAGE WILL INCREASE THROUGHOUT 2008. AS VOLUME INCREASES, WE WILL NEED AN AGGRESSIVE SYSTEMATIC APPROACH TO FAST-TRACK ABLE BORROWERS INTO REFINANCE OF MORTGAGE MODIFICATION. THIS THIRD ELEMENT DOES NOT AND WILL NOT INCLUDE SPENDING TAXPAYER MONEY AND FUNDING AND SUBSIDIES FOR INDUSTRY PROTEST AND TO HOMEOWNERS. WHILE THE REALITY IS A BIT MORE COMPLEX, IN THE INTEREST OF SIMPLICITY, THERE ARE OUR CATEGORIES OF SUBPRIME BORROWERS. FIRST, THERE ARE THOSE WHO CAN’ AFFORD THEIR ADJUSTED INTEREST RATES. THE — WHO CAN AFFORD THEIR ADJUSTED INTEREST RATES. THERE ARE ALSO SUBSTANTIAL HOME WATERS WHO HAVE NOT BEEN MAKING PAYMENTS OF THE STARTER RAID ON THEIR SUBPRIME LOANS AND MAY NOT HAVE THE WHEREWITHAL AND SUSTAIN HOME OWNERSHIP. THESE HOMEOWNERS WILL LIKELY BECOME RENTERS AGAIN. A THIRD CATEGORY OF HOMEOWNERS MIGHT CHOOSE TO REFINANCE THEIR MORTGAGE, PUTTING THEM IN A SUSTAINABLE MARKET WHILE KEEPING INVESTORS HOLD. THIS IS THE FIRST BEST OPTION. SERVICES SHOULD MOVE QUICKLY TO ASSIST THOSE WHO CAN REFINANCE. AND THE FOURTH CATEGORY ARE THOSE WITH STEADY INCOMES AND RELATIVELY CLEAN PAYMENT HISTORIES WHO CAN’ T AFFORD THE LOWER INTO THE TREE MORTGAGE RATE — WHO CAN AFFORD THE LOWER INTRODUCTORY RATE BUT CANNOT AFFORD A HIGHER RATE. WE HAVE TO DETERMINE WHO THEY ARE OF WHAT STEPS NEED TO BE TAKEN TO ASSIST THEM. HOWEVER, GIVEN THE DIFFUSE NATURE OF TODAY’ S MORTGAGE MARKET, THE STEPS TOWARD A REFINANCING A MODIFICATION CAN BE MORE DIFFICULT THAN IT MAY SEEM. THE COMPANY COLLECTING MORTGAGE PAYMENTS EVERY MONTH IS MOST OFTEN DOING THAT ON BEHALF OF THOSE WHO OWN THE MORTGAGE, AND THEY ARE LIMITED IN DECISIONS THEY CAN MAKE ON BEHALF OF THOSE OWNERS WHO ARE SPREAD ALL OVER THE WORLD. WE ARE DETERMINED TO BRING THIS THE FIRST GROUP TOGETHER, TO DEVELOP A SET OF STANDARDS THAT WILL BE IMPLEMENTED ACROSS THE INDUSTRY. FROM THE LARGEST MORTGAGE SERVICERS TO SMALLER SPECIALTY ONES, AN INDUSTRY WIDE APPROACH IS CRITICAL TO THE EFFECTIVENESS OF THIS EFFORT. TO SPEED UP THE MODIFICATION PROCESS, WE ARE WORKING THROUGH THE HOPE NOW ALLIANCE WITH THE AMERICAN SECURITIZATION FORUM ONVENE AT SERVICERS AND INVESTORS TO DEVELOP CATEGORIES OF BORROWERS ELIGIBLE FOR APPROPRIATE MODIFICATIONS AND REFINANCINGS AND AN INDUSTRY- WIDE SOLUTION. THIS WORK TAKES TIME. AS ALL PARTIES SEEK TO FIND CATEGORIES OF BORROWERS FOR STREAMLINED REFINANCE A MODIFICATION, WHERE THAT IS IN THE BEST INTEREST OF BOTH OF THE BAR AND THE MORTGAGE INVESTORS. I AM CONFIDENT THAT WE WILL FINALIZE THESE STANDARDS SOON. AND I EXPECT ALL SERVICERS WILL COMPLEMENT THEM QUICKLY AND CREATE BENCHMARKS TO MEASURE THEIR PROGRESS ALONG THE WAY. AS A RESULT, WHAT HAS BEEN A FRAGMENTED AND CUMBERSOME PROCESS COULD BE A COORDINATED EFFORT WHICH HELPS ABLE HOMEOWNERS. THROUGH CONTINUED, THAT A CHARACTER — DEDICATED EFFORTS BY INDUSTRY, NON-PROFIT ORGANIZATIONS AND THE GOVERNMENT, WE CAN STRIKE THE NECESSARY BALANCE TO MITIGATE THE RISKS TO OUR ECONOMY OF THIS HOUSING DOWNTURN. HE ISSUES ARE COMPLEX AND WILL TAKE TIME. WE ARE WORKING AGGRESSIVELY AND QUICKLY, UTILIZING THE AVAILABLE TOOLS AND CREATING NEW ONES, TO HELP FINANCIALLY RESPONSIBLE BUT STRUGGLING HOMEOWNERS. THIS IN TURN HELPS THEIR NEIGHBORS BY PREVENTING FOR CLOSURES AND SALES COME BACK AND DRIVE DOWN PROPERTY VALUES AND UNDERMINED THE FINANCIAL STABILITY OF FAMILIES AND COMMUNITIES. IT ALSO HELPS INVESTORS AND LENDERS AVOID UNNECESSARY AND COSTLY FOR CLOSURES THAT ARE NOT IN THEIR INTERESTS. WE WILL CONTINUE THESE EFFORTS, MEASURING PROGRESS AND MAKING ADJUSTMENTS WHEN NECESSARY TO ENSURE THAT AS MANY ABLE HOMEOWNERS AS POSSIBLE ARE REACHED AND HELPED. THE THE ADMINISTRATION AND THE PRIVATE SECTOR ARE TAKING ACTION. CONGRESS NEEDS TO ACT NOW TO APPROPRIATE FUNDS FOR MORTGAGE COUNSELING, TO PASS FHA MODERNIZATION AND OVERSIGHT LEGISLATION COME TO PASS LEGISLATION TO TEMPORARILY RELIEVE LIABILITY FROM MORTGAGE DEBT FORGIVEN AND LEGISLATION TO TEMPORARILY INCREASE CAPACITY AND ALLOW STATE AND LOCAL GOVERNMENTS NEW FLEXIBILITY TO USE TAX-EXEMPT BONDS FOR HOME MORTGAGE REFINANCINGS. THE U.S. ECONOMY AND AMERICA’ COMMUNITIES DESERVES NO LESS. THANK YOU VERY MUCH. [APPLAUSE] >> OF COURSE, THAT WAS THE TREASURY SECRETARY, HENRY PAULSON, SPEAKING ON PROBLEMS AND HOUSING AND MORTGAGE INDUSTRY. BE SURE TO STAY TUNE WITH OUR LIVE INTERVIEW WITH HIM IN JUST A FEW MOMENTS. LET US CHECK ON THE MARKETS AND THE REACTION TO SOME OF WHAT THE TREASURY SECRETARY HAD TO SAY. WE HAVE A DOUBT, AS AN BECOME AND NAVTEQ ARE NOW HIGH YEAR. — WE HAVE THE DOW,

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