Radio Address by the President to the Nation 09-01-07

USCCB.org/New American Bible ^ | 09-01-07 | George W. Bush

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For Immediate Release
Office of the Press Secretary
September 1, 2007

President's Radio Address

  President's Radio Address
  Audio
  En Español

      Fact Sheet: New Steps to Help Homeowners Avoid Foreclosure
      In Focus: Economy

THE PRESIDENT: Good morning. This week, I met with Housing Secretary Jackson and Treasury Secretary Paulson to discuss the economy and the turbulence in our Nation's mortgage industry. The fundamentals of America's economy remain strong. But the mortgage industry is going through a period of adjustment. And some Americans are worried about the impact this is having on their ability to make their monthly mortgage payments.

I have made it a priority to help American homeowners navigate these financial challenges, so that as many families as possible can stay in their homes. The Federal government will not bail out lenders -- because that would only make a recurrence of the problem more likely. And it is not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford. But I support action at the Federal level that will help more American families keep their homes.

 One important way to help homeowners during this time of housing market stress is for Congress to change a key part of the Federal tax code. Under current law, when a lender forgives part of a mortgage to help its customer stay afloat, that amount is treated as taxable income. When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes. So I'm working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on cancelled mortgage debt.

Another important step we're taking for American homeowners is to modernize the Federal Housing Administration. The FHA is a government agency that provides mortgage insurance to borrowers through a network of private sector lenders. I've sent Congress important legislation that would help more Americans qualify for this insurance by lowering down-payment requirements, increasing loan limits, and providing more flexibility in pricing. By passing this legislation, Congress will allow the FHA to reach more families in need of our assistance, and I ask Congress to act quickly.

At the same time we will launch a new FHA initiative called FHASecure. This initiative will help some people who have good credit but have recently been missing their payments. FHASecure will help these families refinance their mortgages so they can make their payments and keep their homes.

There are other ways we can help. My Administration will launch a new Foreclosure Avoidance Initiative to help homeowners learn more about their refinancing options. I've directed Secretary Paulson and Secretary Jackson to look into innovative ways to bring together homeowners and counseling groups, financial professionals, and the FHA and government-sponsored enterprises like Fannie Mae and Freddie Mac to help American families find the mortgage product that works best for them.

Finally, the Federal government is working to make the mortgage industry more transparent and more reliable and more fair, so we can reduce the likelihood that homeowners will face similar problems in the future. Federal banking regulators are strengthening lending standards and making mortgages easier to understand. My Administration is working on new rules to help our consumers compare and shop for loans that meet their budgets and needs. We are committed to pursuing fraud and wrongdoing in the mortgage industry.

Homeownership has always been part of the American Dream. During my Administration we've achieved record homeownership rates. We'll continue to work hard to keep our housing market strong, to ensure that American families can afford the homes they buy, and to help bring the dignity and security that comes with homeownership to more of our citizens.

Thank you for listening.

 

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Fact Sheet: New Steps to Help Homeowners Avoid Foreclosure

For Immediate Release
Office of the Press Secretary
August 31, 2007

Fact Sheet: New Steps to Help Homeowners Avoid Foreclosure
President Bush Announces Steps To Help American Families Keep Their Homes And Reform The Mortgage Finance System

  White House News

      President Bush Discusses Homeownership Financing
      In Focus: Jobs & Economy

Today, President Bush Announced Steps At The Federal Level To Help Homeowners In Need Of Assistance Avoid Foreclosure. These steps will help homeowners having difficulty paying their mortgages and ensure that the problems now disrupting the housing industry do not happen again. The fundamentals of America's economy are strong – economic growth is healthy, wages are rising, and unemployment is low. The markets are in a period of transition as participants are re-assessing and re-pricing risk. One area that has shown particular strain is the mortgage market, particularly the subprime sector.

The President Announced The Following Steps To Help American Families Keep Their Homes

• 1. The President Calls On Congress To Pass Federal Housing Administration (FHA) Modernization Legislation. The President's FHA modernization proposal would lower downpayment requirements, allow FHA to insure bigger loans, and give FHA more pricing flexibility. These reforms would empower FHA to reach more families that need help – first-time homebuyers, minorities, and those with low-to-moderate incomes – and offer more options to homeowners looking to refinance their existing mortgage.
  
  
  • The Administration Will Also Launch A New FHA Initiative Called "FHASecure." The President has asked Secretary Jackson to pursue important administrative changes to give FHA the flexibility to help more families stay in their homes during this time of transition in the mortgage market. The FHASecure program will help people who have good credit but who have not made all of their payments on time because of rising mortgage payments. For the first time, FHA will be able to offer many of these homeowners an option to refinance their existing mortgage so they can make their payments and keep their homes. FHA will also charge mortgage insurance premiums based on the individual risk of each loan, using traditional underwriting standards, so it can expand access and help even more families.
    
    
  • Since 1934, FHA Has Helped Close To 35 Million People Buy A Home And Stay In Their Home. FHA is a government agency that provides mortgage insurance to borrowers through a network of private sector lenders. It also offers options to homeowners looking to refinance their existing loan. The President's FHA modernization bill was first sent to the Hill in April 2006, and it passed the House last Congress with over 400 votes. The President has once again asked Congress to send him a clean FHA modernization bill as soon as possible so he can sign it into law.

• 2. The President Calls On Congress To Change A Key Housing Provision Of The Federal Tax Code So It Does Not Punish Families Who Are Forced To Sell Their Homes For Less Than Their Mortgage Is Worth. Current tax law counts cancelled mortgage debt on primary residences as taxable income. For example, if the value of a home declines and $20,000 of the homeowner's loan is forgiven, the tax code treats that $20,000 as taxable income. The President proposes temporary relief to ensure that cancelled mortgage debt on a primary residence is not counted as income.
  
  
  • The President Is Working With Congress In A Bipartisan Fashion To Make This Important Change. Senator Debbie Stabenow (D-MI), along with Senator George Voinovich (R-OH) and others, has introduced a bipartisan bill that would protect homeowners from having to pay taxes on cancelled mortgage debt. In the House, Representatives Rob Andrews (D-NJ) and Ron Lewis (R-KY), along with several of their colleagues, have introduced similar legislation. The President looks forward to working with Congress to reach agreement on a bill, so we can deliver this vital tax relief to American homeowners.

• 3. The President Announced That The Administration Will Launch A New Foreclosure Avoidance Initiative To Help Struggling Homeowners Find A Way To Refinance. Housing and Urban Development Secretary Alphonso Jackson and Treasury Secretary Henry Paulson will reach out to a wide variety of groups that offer foreclosure counseling and refinancing for American homeowners. These groups include community organizations like NeighborWorks, mortgage lenders and loan servicers, FHA, and Government-Sponsored Enterprises like Fannie Mae and Freddie Mac. The goal of this initiative is to expand mortgage financing options, identify homeowners before they face hardships, help them understand their financing options, and allow them to find a mortgage product that works for them.

The President Supports Actions To Protect Homeowners And Prevent These Problems From Happening Again

Federal Banking Regulators Are Improving Disclosure Requirements To Ensure That Lenders Provide Homeowners With Complete, Accurate, And Understandable Information About Their Mortgages. Many borrowers did not receive clear and complete disclosure regarding the terms and conditions of their mortgages. To help protect homeowners in the future, Federal banking regulators recently issued new disclosure guidelines for lenders, and they continue to consider new rules. Homeowners must have complete, accurate, and understandable information – including on the potential increases in their monthly payments.

Federal Banking Regulators Are Working To Strengthen Mortgage Lending Standards. Questionable underwriting standards enabled mortgage lenders to place some borrowers in sophisticated products they could not afford. The Federal banking regulators recently set forth new guidelines to address lending standards, and they will continue to examine new rules. Lenders have an obligation to ensure that their standards accurately measure whether borrowers can afford their mortgage.

The Administration Is Working On New Rules To Help Consumers Shop For The Best Loan Terms. This fall, HUD will propose reforms to the Real Estate Settlement Procedures Act (RESPA) that would promote comparative shopping by consumers for the best loan terms, provide clearer disclosures, limit settlement cost increases, and require fee disclosure.

The Administration Supports State-Based Efforts To Create A Comprehensive Mortgage Broker Registration System. The President has also asked Secretary Paulson to examine the broad issues surrounding mortgage brokers and originators.

The Administration Is Committed To Pursuing Fraud And Wrongdoing In The Mortgage Industry. Some lenders deceived their customers – and pushed them into taking out loans they knew these home buyers could not afford. Federal agencies, such as HUD, the Department of Justice, the Federal Trade Commission, and others, are aggressively pursuing wrongdoers and predatory lenders to ensure they are punished. This will send the message that these practices will not be tolerated.

The President Will Create A Presidential Council On Financial Literacy Composed Of Leading Private Sector Individuals Who Can Help Promote Financial Literacy. This Council will work closely with the Treasury Department, HUD, and the Department of Education to make sure that we are raising awareness of these complicated issues.

The President Supports The Efforts Of Public and Private Sector Groups That Are Promoting Financial Literacy And Providing Foreclosure Counseling. For example, the President's Budget proposes $120 million for NeighborWorks, which provides foreclosure workshops and counseling to borrowers. The President's FY 2008 Budget request includes $50 million for HUD's housing counseling program.

The President Has Asked Secretary Paulson To Lead The President's Working Group On Financial Markets In Examining Some Of The Broader Market Issues Underlying The Recent Mortgage Problems. The President's Working Group on Financial Markets is led by Treasury Secretary Paulson and is composed of Federal Reserve Chairman Bernanke, Securities and Exchange Commission Chairman Cox, and Commodity Futures Trading Commission Acting Chairman Lukken. The group will examine:

• The role of credit rating agencies and how their ratings are used in lending procedures, and
• How securitization, the repackaging and selling of assets, has changed the mortgage industry and related business practices.

# # #

[Dems_R_Losers]

Right, I will believe a RESPA reform when I see it. This rule has been “under construction” since 2004 when the White House pulled a RESPA rule that was in its final stages due to political pressure from realtors and title insurers. Every six months HUD says the new rule is coming “soon.”

[Salvation]

**Every six months HUD says the new rule is coming “soon.”**

LOL!

Likewise, I will believe it when I see it.

[Pelham]

The President's FHA modernization proposal would lower downpayment requirements, allow FHA to insure bigger loans, and give FHA more pricing flexibility.

The lack of downpayments contributed to the housing bubble. FHA guarantees encourage reckless lending since taxpayers will be stuck with the losses. These are bad ideas that Bush is proposing. The excesses of the mortgage market should be born by the lenders who bought the risky paper, and by the borrowers who bet on ever rising prices.

[Salvation]

I know I put down over half of the price of my condo on the downpayment in 1991 to make my payments small. I basically have only 10 or 11 years left on my mortage and am considering paying it all off with my savings to help with medical costs. (The money gets spent one way or another, doesn’t it?)

The small downpayment strategy doesn’t make sense to me.

[Wandaroos]

Thanks so very much for the ping! :)

[Salvation]

You’re welcome. Some are better than others, though, aren’t they?

[Pelham]

Small and no-downpayments were encouraged by this administration as part of its “ownership society”. What this does is broaden the pool of buyers, which serves to drive up housing prices. It makes housing more susceptible to flippers and speculators since they can tie up housing with little cost. It makes loan fraud much easier to bring off.

I expect that the days of loan brokers and easy loans are done, regardless of what politicians do. Investors are learning the hard way that traditional lending standards protected them as well as the borrower. They won’t be providing the cheap money that fueled the bubble.