Homeownership and Prosperity in the 21st Century
Chris Dodd understands that homeownership is the very cornerstone of the American Dream. Yet today millions of hardworking Americans are struggling to find homes they can afford. Foreclosure rates are reaching record highs. Many Americans who have played by the rules and own their own homes have fallen victim to predatory lending practices that have resulted in debt, distress, and far too often, bankruptcy and foreclosure. The shortage of affordable homes, the erosion of fair lending practices, and the resulting sharp increase in foreclosures, are deteriorating the quality of life for millions of Americans, undermining our communities and economy, and jeopardizing the American Dream of homeownership.
America needs a President who will do everything in his power to confront the current mortgage crisis, help people keep their homes, and keep the opportunity for homeownership alive for generations to come. Chris Dodd has a comprehensive plan to preserve and promote homeownership while ensuring that mortgages continue to be a source of family and community security, wealth creation, and opportunity for success, not potential pitfalls for disaster. As President, Chris Dodd will:
- Increase opportunities for homeownership by stabilizing the mortgage and financial markets
- Protect homeowners from unscrupulous lenders and provide assistance to victims of predatory loans so that families can keep their homes
- Increase affordable housing so that no American is ever forced to move away from their community because they can’t afford their mortgage or rent payments
- Reduce the scourge of homelessness, especially for children and families
But just as importantly, America needs a President who knows how to get results, and who will bring people together to turn Democratic principles into American policies. As Chairman of the Senate Banking Committee, Chris Dodd has been a leader in addressing the subprime mortgage crisis that is threatening millions of homeowners. He has used his Chairmanship to press regulators to act and he recently secured $100 million in funds for foreclosure prevention efforts. As Forbes Magazine noted, “…Chris Dodd has been the lone voice from Capitol Hill to have any significant response to the market chaos fueled by subprime mortgage defaults.”
Helping People Keep Their Homes
Preventing Foreclosures. Home foreclosures in our country are at record high levels, putting homeowners, communities, the mortgage finance industry, and the economy at risk. As President, Chris Dodd will help Americans facing foreclosure by creating a $2 billion Foreclosure Prevention Fund designed to move homeowners out of predatory loans and into mortgages they can afford. Funds will be made available to federal, state, local and nonprofit organizations to help homeowners modify or refinance predatory loans so that they are more affordable in both the short- and long-term. Funds will go to state and local programs that provide direct financial assistance to homeowners who are in danger of foreclosure. Funds will also be allocated for Chris Dodd’s Preserving Homeownership Initiative to bolster consumers’ financial literacy and education.
Homeownership Education. Today, the home buying process has grown increasingly complicated with lenders offering prospective homeowners an array of mortgage products, some of which are predatory and unaffordable. To make the modern mortgage market work for working Americans, Chris Dodd will create a Preserving Homeownership Initiative to help families understand and improve their credit scores, educate consumers on how to shop for the best mortgage rates, direct home buyers to down payment assistance programs, and teach consumers how to steer clear of predatory lenders, especially as it relates to refinancing. By helping Americans qualify for safer, lower price loans, and educating homeowners on how to watch out for predatory lenders, Chris Dodd will help keep homeowners on a path of long-term financial security and prosperity.
Keeping Mortgage Credit Flowing. In the midst of the current crisis, markets are seizing up. Investors won’t buy loans so lenders can’t make them. As President, Chris Dodd will call on the Office of Federal Housing Enterprise Oversight (OFHEO) to lift the portfolio caps on Fannie Mae and Freddie Mac so they can inject badly needed liquidity into the mortgage market. By growing these portfolios by 10% -- consistent with safety, soundness and consumer protection standards -- Fannie Mae and Freddie Mac will bring liquidity and stability to the market allowing more Americans to access credit on fair and affordable terms. Lifting the caps will also allow responsible lenders to more effectively assist homeowners who have been victims of predatory lending as additional fair and affordable credit becomes available for people to refinance their homes.
Building a More Secure Future
Reforming the Federal Housing Administration. Chris Dodd will modernize the Federal Housing Administration (FHA) so additional borrowers can get affordable, safe mortgages. Through his leadership, Chris Dodd will ensure that the agency reaches more people, particularly as it relates to refinancing existing mortgages. He will raise FHA loan limits, simplify and lower down payment requirements, expand the reverse mortgage program for the elderly, and provide additional refinancing options. By reforming the FHA so lenders and borrowers can get insurance for affordable, safe mortgages, and by providing low-cost credit without deceptive terms like prepayment penalties and teaser rates, the FHA will help solve the predatory lending crisis while becoming a more effective and fiscally sound tool for future homeownership. Under Chris Dodd’s leadership, the FHA will help millions of families achieve their American Dream of homeownership in the short- and long-term by providing safe, affordable and fair credit.
Reforming Credit Agencies. Chris Dodd will reform credit agencies to make them more transparent and eliminate conflicts of interest so that they have the proper incentives to never again miss the mark in rating financial instruments like mortgage-backed securities. There is too much at stake for our economy to let the rating agencies continue to operate as if in a vacuum. It is time to restore faith and confidence in credit ratings, the underpinning of our modern financial markets.
Strengthening Enforcement and Oversight. The Federal Reserve and her sister agencies have been negligent in their oversight of the subprime market. Years ago, Congress directed them to end the kinds of abuses and practices that have caused record foreclosures and the current turmoil in the mortgage markets. Chris Dodd believes that it is time for the agencies that oversee mortgages and the mortgage market to write strong rules and aggressively enforce them. As President, Chris Dodd will insist on stiffer civil and criminal penalties for those that have made fraudulent loans to unsuspecting borrowers, including heavy fines and imprisonment, and ensure that the Federal Reserve meets its obligations under the Home Ownership and Equity Protection Act of 1994 (HOEPA). Chris Dodd will also appoint Federal Reserve Board Members who understand their responsibility to protect consumers from predatory practices.
Ending Predatory Lending. As President, Chris Dodd will immediately put a stop to the abusive, unfair, coercive and deceptive lending practices that have forced thousands of Americans into foreclosure and put millions more in danger of losing their homes. He will eliminate the use of prepayment penalties, prohibit balloon and exploding payments, prohibit teaser rates and eradicate broker kickbacks (yield-spread premiums). Chris Dodd will prevent lenders from steering borrowers to higher cost or lower quality mortgages, require an analysis of borrowers’ ability to repay, and require documentation of income. He will require good faith and fair dealing in home loan servicing by requiring prompt crediting of payments, limiting the amount and timing of fees a servicer or lender may charge other than interest or late fees, requiring that fees charged must be for services actually provided, limiting the amount of late fees a servicer may charge, and requiring that all payments go to current amounts due before going to cover delinquencies. Chris Dodd will establish a duty of good faith and fair dealing for brokers and appraisals. He will investigate discriminatory lending patterns and prosecute to the fullest extent of the law violators of fair lending laws. As President, Chris Dodd will put an end to the predatory and abusive practices that have trapped borrowers in expensive loans and eaten away at their hard earned money. Chris Dodd believes that consumers have a right to be treated fairly and honestly.
Affordable Housing for Every Family
Tax-Deferred Individual Homeownership Savings Accounts. As President, Chris Dodd will create Individual Homeownership Accounts that will allow working Americans to save money - tax-free - so they can invest in a down payment on a home. The federal government will match low-income and working families’ accounts up to $500 each year, putting the dream of homeownership within reach for millions of Americans.
Expanding Affordable Housing. As President, Chris Dodd will ensure that there are always affordable homes for working families. He will encourage states and localities to develop affordable homes and mixed-income housing on publicly owned land that is vacant or underutilized, and provide incentives for builders and developers to create affordable homes within new residential developments. Chris Dodd will support local efforts to provide affordable housing to municipal employees such as teachers, police officers, and firefighters as a means to attract and retain them. And, he will provide tax credits to encourage landlords to invest in their properties and keep them affordable. Chris Dodd will increase investments in successful housing programs such as Hope VI and Section 8 vouchers. As President, he will also expand down payment assistance through creation of a Shared Equity Trust in which homeowners receive grants to reduce the cost of purchasing a home in exchange for agreeing to share home price appreciation with the Trust upon future sale. The Shared Equity Trust will keep homes affordable for current homeowners and the next round of qualifying purchasers.
Affordable Housing for Seniors. After a lifetime of hard work and paying taxes, every senior deserves the security of safe and affordable housing. As President, Chris Dodd will commit an additional $1 billion in his first term to expand the supply of affordable senior housing. Chris Dodd will also expand seniors’ access to reverse mortgages so that they can draw upon the equity they have in their homes to meet the daily costs of living secure and independent lives.
Combating Homelessness
Assisting America’s Homeless. Chris Dodd understands that good and decent societies take care of their most vulnerable. Families with children now comprise about 40 percent of the homeless population – 1 in 10 homeless Americans are veterans. As President, Chris Dodd will increase funds to provide for our nation’s homeless and streamline the McKinney-Vento program so that local programs are given additional flexibility in how their programs are run, to ensure that rural communities can effectively compete for funds, to ensure that homeless families are better served, and to provide assistance to more Americans in need. Chris Dodd will provide additional funds for efforts focused on children with the goal that no child in America should grow up homeless.
A Record of Leadership on the Subprime Mortgage Crisis
As Chairman of the Senate Banking Committee, Chris Dodd has been a leader in addressing the subprime mortgage crisis, recently securing $100 million to assist homeowners in danger of foreclosure. As Forbes Magazine noted, “So far, Senate Banking Committee Chairman and Presidential candidate Chris Dodd has been the lone voice from Capitol Hill to have any significant response to the market chaos fueled by subprime mortgage defaults.”
- Dodd Secured $100 Million to Help Families Keep Their Homes. In September, Chris Dodd worked to secure $100 million for foreclosure prevention efforts. These grants will be used to help at-risk homeowners modify or refinance their mortgages, and will help local groups provide counseling for homeowners facing foreclosure.
- Dodd Pressed Regulators To Expand Credit for Homeowners. In mid-August, Chris Dodd called on the Bush Administration to increase – in a safe, sound, and consumer-friendly manner – the portfolio caps placed on Fannie Mae and Freddie Mac. Raising these caps would help banks continue to offer home loans and ease the credit crunch on homeowners.
- Dodd is Now Pushing for Comprehensive Reform of the FHA. The Senate Banking committee recently passed Chris Dodd’s FHA Modernization Act of 2007 by a vote of 20-1. The bill would lift loan limits and decrease minimum down payments, expand access to home ownership for thousands of families, as well as expanding access to some borrower programs, and strengthen consumer protections. As the Hartford Courant reported, the bill is considered “one of Washington’s most important efforts to ease the subprime mortgage crisis.”
