Statement by Senator Clinton Announcing Support for New Action on the Housing Crisis

America's housing crisis is threatening to drive our economy into a deep recession. Mortgage foreclosures are at an all-time high, housing prices are falling at record rates, and for the first time on record, homeowners own less than half the value of their homes. This crisis threatens not only to force millions of Americans out of their homes but put hundreds of thousands of Americans out of work and devastate communities across the nation.

That's why today, I joined my friend Barney Frank and my Senate colleagues to support a new approach that will help ease the credit crunch and let millions of families facing foreclosures restructure their mortgages and stay in their homes.

For a year now, I have been speaking out on the need to address our nation's housing crisis. In March 2007, I first called for a "foreclosure timeout," that would bring together servicers, lenders and government actors to help keep families in their homes. In August 2007, I called for increased regulations to protect borrowers and rein in rampant mortgage industry abuses. In December 2007, I proposed a framework to keep families in their homes with a moratorium on foreclosures for 90 days and a voluntary freeze of at least 5 years on adjustable rate subprime mortgage rates. And in early January of this year, I called for $30 billion in immediate assistance to help states and cities mitigate the foreclosure crisis.

While I was heartened today to see the Administration acknowledge the need for greater federal oversight of the mortgage industry, this news comes seven months and 1.6 million foreclosure filings after I first called for similar steps. And while the Bush Administration has belatedly acknowledged that both a foreclosure moratorium and an extended rate freeze are important components of an eventual solution, their approach to-date has been far too narrow to address the scope of the crisis.

That's why today, in addition to my proposals for a voluntary moratorium and rate freeze, I am supporting a plan to help millions of families restructure their mortgages on affordable, sustainable terms. I am co-sponsoring legislation with Senator Dodd to expand the Federal Housing Administration's (FHA) capacity to guarantee responsible, restructured mortgages. This legislation will give lenders new incentives to work with homeowners who have seen the value of their homes fall below the principal on their loans, and put them into more affordable, secure long-term mortgages.

This approach is not a bailout. It is a sensible way for all actors - lenders, investors, servicers and borrowers - to share responsibility, keep families in their homes and stabilize our communities and our economy.

I first championed FHA reform over a year ago, and offered legislation to help modernize the FHA infrastructure to make the investments in personnel and information technology to help meet market demand and offer safe and secure alternatives to subprime mortgages. Today, I am expanding that approach so that the FHA can help stabilize the current housing crisis.

Finally, I am calling on Congress to immediately establish a $30 billion Emergency Housing Fund for states and localities struggling with mounting foreclosures. While the recently passed stimulus bill provides much-needed support for struggling workers and seniors, it fails to address the housing crisis, which is at the heart of our economy's problems. This Emergency Fund would give governors, mayors, and community organizations the resources they need to stem the downward economic spiral that accompanies concentrated foreclosures. These resources could be used to buy, rehabilitate and put foreclosed properties back into constructive use, expand foreclosure prevention and counseling programs, and support community-level efforts to combat blight.