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TREASURY SECRETARY HENRY PAULSON IS ABOUT TO BEGIN SPEAKING IN WASHINGTON. LET US GO THERE LIVE. >> I MENTIONED IT TIMELINESS BECAUSE HOUSING ISSUES ARE AFFECTING CITIZENS ALL ACROSS THE COUNTRY AND BECAUSE CONGRESS RETURNS TO WASHINGTON TODAY. IN THE FINAL DAYS OF THE CONGRESSIONAL SESSION, THERE IS MUCH THAT CONGRESS CAN DO TO HELP AMERICAN HOMEOWNERS. AS WE ARE ALL AWARE, THE HOUSING AND MORTGAGE MARKETS ARE WORKING THROUGH A PERIOD OF TURMOIL, AS ARE OTHER CREDIT MARKETS AS A RISK IS BEING REASSESSED AND REPRICED. WE EXPECT THE TURBULENCE WILL TAKE SOME TIME TO WORK THROUGH AND WE EXPECT SOME PENALTY WHEN SHORT-TERM GROWTH. THE POSITIVE NEWS ABOUT IT — AS WE ARE CONFRONTING THESE CHALLENGES AGAINST THE BACKDROP OF A STRONG GLOBAL ECONOMY AND THE U.S. ECONOMY REMAINS FUNDAMENTALLY SOUND. CORE INFLATION IS CONTAINED, CONTINUED JOB GAINS ARE PROVIDING GOOD FOUNDATION FOR HOUSEHOLDS SPENDING, CORPORATE BALANCE SHEETS REMAIN HEALTHY OVER ALL, AND STRONG GROWTH ABROAD IS SUPPORTING U.S. EXPORTS. OUR ECONOMY WILL CONTINUE TO GROW, BUT IT IS FACING A NUMBER OF CHALLENGES. AND, AS I SAID BEFORE, THE HOUSING MARKET DOWNTURN IS THE BIGGEST CHALLENGE TO OUR ECONOMY. WHEN HOME FORECLOSURES SPIKA, THE DAMAGE IS NOT LIMITED ONLY TO THOSE WHO LOSE THEIR HOMES. HOLMES AND FORECLOSURE COMPOSED COSTS FOR WHOLE NEIGHBORHOODS AS CRIME GOES UP AND PROPERTY VALUES DEC CMBREAKPOINT INE. AVOIDING PREVENTABLE FORECLOSURES, THEN, IS IN THE INTEREST OF ALL HOMEOWNERS. MORTGAGE MARKET FINANCIAL INNOVATION HAS BENEFIT AT THE U.S. ECONOMY AND HOME OWNERS. IT HAS ALSO INTRODUCED SOME OF THE CHALLENGES WE ARE FACING TODAY. FINANCIAL INNOVATION LED TO THE CREATION OF MORTGAGE PRODUCT THE PUT HOME OWNERSHIP WITHIN THE REACH OF MORE PEOPLE. AT THE SAME TIME, INNOVATION ALSO MADE RISKY LOANS WITH NO DOWN PAYMENTS OR MINIMAL DOCUMENTATION, AND MADE THESE LOANS MORE WIDELY AVAILABLE. SIMILARLY, SECURITIZATION HAS BROUGHT BENEFITS AND CHALLENGES, MAKING MORE CAPITAL AVAILABLE TO MORTGAGES BUT CREATING GREATER MARKET COMPLEXITY. AS A RESULT, WE NOW HAVE AN ARRAY OF DIFFERENT MARKET PARTICIPANTS OFTEN WITH DIFFERENT INTERESTS. STILL, FOR CLOSURE IS EXPENSIVE TO ALL PARTICIPANTS — LENDERS AND INVESTORS — CMBREAKPOINT ND THERE IS AN IMPORTANT INCENTIVE TO AVOID FORECLOSURE BY THE HOMEOWNER HAS THE FINANCIAL WHEREWITHAL TO OWN A HOME. AN APPROPRIATE ROLE FOR GOVERNMENT IS TO BRING THE PRIVATE SECTOR TOGETHER WHEN INNOVATION GREATLY INCREASES THE COMPLEXITY OF ACHIEVING BENEFICIAL SOLUTION TO ALL PARTIES INVOLVED. THE NUMBER OF SUBPRIME MORTGAGE RESETS WILL INCREASE DRAMATICALLY NEXT YEAR, AND WE NEED TO MAKE SURE THE CAPACITY IS THERE TO HANDLE IT. SO, TREASURY IS AGGRESSIVELY PURSUING A COMPREHENSIVE PLAN TO HELP AS MANY ABLE HOME — HOMEOWNERS AS POSSIBLE KEEP THEIR HOMES. WE BEGAN BY CONVENING A DIVERSE GROUP OF MARKET PARTICIPANTS WHO WERE PRESENT AT ALL SEGMENTS OF THE MORTGAGE INDUSTRY. BASED ON WHAT WE LEARNED, WE ARE IMPLEMENTING A THREE-POINT PLAN TO AVOID PREVENTABLE FORECLOSURES AND MINIMIZE THE IMPACT OF THE HOUSING DOWNTURN ON THE U.S. ECONOMY. FIRST, WE ARE INCREASING EFFORTS TO REACH ABLE HOMEOWNERS WHO ARE STRUGGLING WITH THE CMBREAKPOINT R MORTGAGES. SECOND, WE’ RE WORKING TO INCREASE THE AVAILABILITY OF AFFORDABLE MORTGAGE SOLUTIONS. THIRD, WE ARE LEADING THE INDUSTRY TO DEVELOP A SYSTEMATIC MEANS OF EFFICIENTLY MOVING ABLE HOME DOLLARS INTO SUSTAINABLE MORTGAGES. — HOMEOWNERS AND TO SUSTAINABLE MORTGAGES. THIS MORNING I WILL PROVIDE MORE DETAIL OF THE THREE ELEMENTS, AN UPDATE OF THE PRIVATE SECTOR EFFORTS, GOVERNMENT EFFORTS AND THE ADDITIONAL STEPS NEEDED. FIRST, WE MUST REACH HOMEOWNERS WHO ARE STRUGGLING, REACHED THEM EARLY, AND REACH OF THEM WITH INFORMATION AND WITH HOPE. THE NEED FOR THIS EFFORT BECAME STARKLY CLEAR WHEN WE LEARNED THAT 50 PERCENT OF FORECLOSURES OCCURRED WITHOUT BORROWERS EVER TALKING TO THEIR LENDER OR MORTGAGE COUNSELOR. WE KNOW THAT IF WE ARE ABLE TO MAKE A DIFFERENCE, THAT NUMBER HAS TO BE REDUCED. WE LEARNED THAT MORTGAGE INDUSTRY LEADERS HAVE ALREADY STEPPED UP THEIR EFFORTS TO CMBREAKPOINT REACH DELINQUENT BORROWERS, BUT MANY OF BORROWERS IN TROUBLE WERE AFRAID TO SPEAK TO OTHER LENDERS. BORROWERS DID RESPOND MORE FAVORABLY TO MORTGAGE COUNSELORS, BUT THE COUNSELORS DID NOT KNOW WHICH OF BORROWERS NEEDED THE ASSISTANCE. TREASURY AND HUD HELPED BRING THE TWO GROUPS TOGETHER IN A COLD POLITICAL LESSON OF MORTGAGE SERVICERS, COUNSELORS, AND INVESTORS WORKING TO AVOID PREVENTABLE FORECLOSURES AND TO IMPROVE THE FUNCTIONING OF THE MORTGAGE MARKET. SINCE ITS FORMATION, THE HOPE NOW ALLIANCE HAS MADE SIGNIFICANT PROCESS — PROGRESS. IN THE PAST, SOME SERVICERS MAY NOT HAVE CONTACTED OUR WARS UNTIL AFTER THE LOANS WERE DELINQUENT. TODAY, ALL HOPE NOW SERVER SERVERS ARE CONTACTING BORROWERS 120 DAYS IN ADVANCE OF THE MORTGAGE RESET TO REACH THEM EARLY BEFORE THE MORTGAGE PROBLEMS BECOME OVERWHELMING. CMBREAKPOINT OR THOSE TROUBLED BORROWERS THAT SERVICERS HAVE NOT BEEN ABLE TO REACH, HOPED THE NOW HAS LAUNCHED A NATIONWIDE LETTER CAMPAIGN. THESE SIMPLE, 1-PAGE LETTER IS ON HOLD NOW LETTERHEAD PROVIDE A TOLL-FREE HOTLINE WHICH HOMEOWNERS CAN CALL TO EXPLORE OPTIONS WITH THEIR SERVICERS THAT MAY HELP THEM KEEP THEIR HOME. MORTGAGE INVESTORS RECOGNIZE THE FORECLOSURE IS COSTLY AND OFTEN NOT IN THEIR INTERESTS. THEY RECOGNIZE THAT QUALITY MORTGAGE COUNSELING CAN HELP PREVENT FORECLOSURES. BY BRINGING TOGETHER COUNSELORS, SERVICES, AND INVESTORS, THE HOLE NOW ALLIANCE HAS OF THE RESEARCH OF INVESTORS TO BEAR TO HELP NONPROFIT MORE COUNCIL IS TO BE MORE WIDELY AVAILABLE. THE ALLIANCE IS SCALING UP A NATIONAL HOT LINE THAT BORROWERS CAN CALL FOR MORTGAGE COUNSELING. AND LET ME SAY TO THOSE LISTENING OUT THERE, IF YOU ARE WORRIED ABOUT LOSING YOUR HOME, CALL THIS NUMBER 1-888- CMBREAKPOINT 95-HOPE, TO SEE IF YOU ARE ELIGIBLE FOR ASSISTANCE. WELL, I HOPE NONE OF YOU WILL NEED TO CALL THIS NUMBER, BUT PLEASE FEEL FREE TO DO SO IF YOU’ RE GOING TO HAVE A PROBLEM. THIS HOTLINE IS AVAILABLE 24 HOURS A DAY TO PROVIDE VITAL MORTGAGE COUNSELING IN MULTIPLE LANGUAGES. NOTHING IS WORSE THAN DOING NOTHING. THE HOPE NOW EFFORT TO STREAMLINE REFINANCING AND MODIFICATIONS AS A POSITIVE STEP, BUT IT IS NOT A SILVER BULLETS. THERE IS NO SINGLE SOLUTION TO ADDRESS ALL OF THE ISSUES CURRENTLY AFFECTING THE HOUSING AND MORTGAGE MARKET. THE GOVERNMENT HAS A ROLE TO PLAY AS WELL. BUT FIRST WE NEED TO DRAW ATTENTION TO THESE LETTERS AND URGE BORROWERS WHO RECEIVE THEM TO ACT ON THEM. SECRETARY JACKSON AND I HAVE JUST BEEN DOING THAT, CMBREAKPOINT VERY RECENTLY SENT A COPY TO THESE LETTERS TO ALL MEMBERS OF CONGRESS SO THAT THEY CAN ALERT THEIR CONSTITUENTS. WE ARE ASKING MAYORS AND GOVERNORS TO DO THE SAME PERIOD WE ALSO JOINED HOPE NOW EFFORTS TO JOIN THE PUBLIC SERVICE ANNOUNCED A CAMPAIGN TO SPREAD THE WORD THAT HOPE IS BUT A PHONE CALL AWAY. WHILE INCREASED INDUSTRY FUNDING IS VERY IMPORTANT, WE ALSO NEED TO DO OUR PART TO SUPPORT NON- PROFIT MORTGAGE COUNSELING ORGANIZATION. FOR THIS CAMPAIGN TO BE SUCCESSFUL, THERE MUST BE AN A TRAIN MORTGAGE COUNSELORS TO ANSWER THE PHONE WHEN HOMEOWNERS CALL. THE ADMINISTRATION’ S REQUEST FOR FUNDING NON-PROFIT MORTGAGE COUNSELING OPERATIONS IS IN ITS BUDGET. BUT THE APPROPRIATIONS BILL HAS YET TO BE FINALIZED. CONGRESS NEEDS TO GET IT DONE AND TO GET IT DONE QUICKLY. OF COURSE, REACHING HOMEOWNERS IS ONLY PAR
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