    [Public Papers of the Presidents of the United States: George W. Bush (2007, Book II)]
    [December 6, 2007]
    [Pages 1527-1530]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks Following a Meeting With Secretary of the Treasury Henry M.
    Paulson, Jr., and Secretary of Housing
    and Urban Development Alphonso R. Jackson
    December 6, 2007

        Good afternoon. Before turning to the situation in the housing
    market, I send my sympathy to the families of those murdered in Omaha,
    Nebraska, yesterday. I was in Omaha just before the shooting took place,
    and I know what a difficult day it is for that fine community. The
    victims and their loved ones are in the prayers of Americans. The
    Federal Government stands ready to help in any way we can. And our whole
    Nation grieves with the people of Omaha.
        I just had an important discussion on the housing market with
    Secretary Paulson, Secretary Jackson, and members of the mortgage
    industry.
        The housing market is moving through a period of change. In recent
    years, innovative mortgage products have helped millions of Americans
    afford their own homes, and that's good. Unfortunately, some of these
    products were used irresponsibly. Some lenders made loans that borrowers
    did not understand, especially in the subprime sector. Some borrowers
    took out loans they knew they could not afford. And to compound the
    problem, many mortgages are packaged into securities and sold to
    investors around the world. So when concerns about subprime loans begin
    to mount--began to mount, uncertainty spread to the broader financial
    markets.
        Secretary Paulson and Secretary Jackson and Chairman
    Bernanke are monitoring developments in the
    housing market and working to limit the disruption to our overall
    economy. Data released this morning confirmed the difficulties facing
    the housing market. Yet one reason for confidence is that the downturn
    in housing comes against a backdrop of solid fundamentals in other
    areas, including low inflation, a healthy job market, record-high
    exports. America's economy has proved itself highly resilient. And it is
    strong, and it is flexible, and it is dynamic enough to weather this
    storm.
        For individual homeowners, the problem is more difficult. Many of
    those feeling financial stress have an adjustable rate mortgage, which
    typically starts with a lower

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    interest rate and then resets to a higher rate after a few years. Many
    of those borrowers cannot afford the higher payments. And now some are
    fearing foreclosure, which is a terrible burden for hard-working
    families and a source of concern for communities and neighborhoods
    across our country.
        The rise in foreclosures would have negative consequences for our
    economy. Lenders and investors would face enormous losses, so they have
    an interest in supporting mortgage counseling and working with
    homeowners to prevent foreclosure.
        The Government has a role to play as well. We should not bail out
    lenders, real estate speculators, or those who made the reckless
    decision to buy a home they knew they could never afford. Yet there are
    some responsible homeowners who could avoid foreclosure with some
    assistance. And in August, I announced a series of targeted actions to
    help them. My administration has moved forward in three key areas.
        First, we've launched a new initiative at the Federal Housing
    Administration called FHASecure. This program gives the FHA greater
    flexibility to offset refinancing to homeowners--to offer refinancing to
    homeowners who have good credit histories, but cannot afford their
    current payments. In just 3 months, the FHA has helped more than 35,000
    people refinance. And in the coming year, the FHA expects this program
    to help more than 300,000 families.
        Second, in August, I asked Secretaries Paulson and Jackson to work
    with lenders and loan servicers and mortgage counselors and investors on
    an initiative to help struggling homeowners find a way to refinance.
    They assembled a private sector group called HOPE NOW Alliance. Their
    leaders are with us today. HOPE NOW is an example of Government bringing
    together members of the private sector to voluntarily address a national
    challenge, without taxpayer subsidies or without Government mandates.
    I'm pleased to announce that our efforts have yielded a promising new
    source of relief for American homeowners.
        Representatives of HOPE NOW just briefed me on their plan to help
    homeowners who will not be able to make the higher payments on their
    subprime loan once the interest rates go up, but who can at least afford
    the current starter rate. HOPE NOW members have agreed on a set of
    industry-wide standards to provide relief to these borrowers in one of
    three ways: by refinancing an existing loan into a new private mortgage,
    by moving them into an FHASecure loan, or by freezing their current
    interest rate for 5 years.
        Lenders are already refinancing and modifying mortgages on a case-
    by-case basis. With this systematic approach, HOPE NOW will be able to
    help large groups of homeowners all at once. This will bring more relief
    to more homeowners more quickly. HOPE NOW estimates there are up to 1.2
    million American homeowners who could be eligible for this assistance.
        Public awareness is critical to this effort because the group can
    only help homeowners who ask for it. So HOPE NOW recently mailed
    hundreds of thousands of letters to borrowers falling behind on their
    payments, and they have set up a counseling hotline that Americans can
    call 24 hours a day. I've directed Secretaries Paulson and Jackson to
    expand the public awareness campaign. And I have a message for every
    homeowner worried about rising mortgage payments: The best you can do
    for your family is to call 1-800-995-HOPE [1-888-995-HOPE].* That is 1-
    800-995-H-O-P-E [1-888-995-H-O-P-E].*
    ---------------------------------------------------------------------------
        *White House correction.
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        Third, the Federal Government is taking several regulatory actions
    to make the mortgage industry more transparent, reliable, and fair.
    Later this month, the Federal Reserve intends to announce stronger
    lending standards that will help protect borrowers. At the same time,
    HUD and the Federal

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    banking regulators are taking steps to improve disclosure requirements
    so that homeowners can be confident that they are receiving complete,
    accurate, and understandable information about their mortgages.
        As we take these steps, the Department of Justice will continue to
    pursue wrongdoing in the banking and housing industries so we can help
    ensure that those who defraud American consumers face justice.
        These measures will help many struggling homeowners, and the United
    States Congress has the potential to help even more. Yet in 3 months
    since I made my proposals, the Congress has not sent me a single bill to
    help homeowners. If Members are serious about responding to the
    challenges in the housing market, they can start with the following
    steps.
        First, Congress needs to pass legislation to modernize the FHA. In
    April 2006, I sent Congress an FHA modernization bill. This bill would
    increase access to FHA-insured loans by lowering down payment
    requirements, allowing the FHA to insure bigger mortgages in high-cost
    States, and expanding FHA's authority to price insurance fairly with
    risk-based premiums. This bill could allow the FHA to reach an
    additional 250,000 families who could not otherwise qualify for prime-
    rate financing. Last year, the House passed the bill with more than 400
    votes, and this year, the House passed it again. Yet the Senate has not
    acted. The liquidity and stability that FHA provides the market are
    needed more than ever, and I urge the United States Senate to move as
    quickly as possible on this important piece of legislation.
        Second, Congress needs to temporarily reform the Tax Code to help
    homeowners refinance during this time of housing market stress. Under
    current law, if the value of your house declines and your bank forgives
    a portion of your mortgage, the Tax Code treats the amount forgiven as
    taxable income. When you're worried about making your payments, higher
    taxes are the last thing you need. The House agrees and recently passed
    this relief with bipartisan support. Yet the Senate has not responded.
    This simple reform could help many American homeowners in an hour of
    need, and the Senate should pass it as soon as possible.
        Changing the Tax Code can also help State and local governments do
    their part to help homeowners. Under current law, cities and States can
    issue tax-exempt bonds to finance new mortgages for first-time home
    buyers. My administration has proposed allowing cities and States to
    issue these tax-exempt mortgage bonds for an additional purpose: to
    refinance existing loans. This temporary measure would make it easier
    for State housing authorities to help troubled borrowers, and Congress
    should approve it quickly.
        Third, Congress needs to pass funding to support mortgage
    counseling. Nonprofit groups like NeighborWorks provides essential
    services to--by helping homeowners find affordable mortgage solutions
    and prevent foreclosures. My budget requests nearly $120 million for
    NeighborWorks and another 50 million for HUD's mortgage counseling
    programs. Congress has had these requests since February, yet it has not
    sent me a bill, and they need to get the funding to my desk.
        Fourth, Congress needs to pass legislation to reform Government-
    sponsored enterprises like Freddie Mac and Fannie Mae. These
    institutions provide liquidity in the mortgage market that benefits
    millions of homeowners, and it is vital they operate safely and operate
    soundly. So I've called on Congress to pass legislation that strengthens
    independent regulation of the GSEs and ensures they focus on their
    important housing mission. The GSE reform bill passed by the House
    earlier this year is a good start, but the Senate has not acted, and the
    United States Senate needs to pass this legislation soon.
        The holidays are fast approaching, and unfortunately, this will be a
    time of anxiety

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    for Americans worried about their mortgages and their homes. There's no
    perfect solution, but the homeowners deserve our help. And the steps
    I've outlined today are a sensible response to a serious challenge. I
    call on Congress to move forward quickly and join with me in delivering
    relief to homeowners in need so we can keep our economy healthy and the
    American Dream alive.
        God bless.

    Note: The President spoke at 1:23 p.m. in the Roosevelt Room at the
    White House.