Clinton on foreclosures, mortgage problems

The mortgage mess is a now a presidential campaign issue. Democratic Senator Hillary Clinton today in New Hampshire sketched a plan to crack down on unscrupulous lending and offer assistance to troubled homeowners facing foreclosure.

"First, I would focus on cracking down on unscrupulous brokers who lure unsuspecting families into unfair mortgages," Clinton said at the Derry NH event.

"Many families assume their broker has their best interests at heart. But that is often not the case. What they don't realize is that the more expensive the mortgage a broker sells, the more money the broker makes. So brokers have a strong incentive to steer their clients toward the biggest, most expensive mortgages, even if clients can't afford them.
"We need to help families go into homebuying with their eyes wide open. So I'm proposing, as a matter of federal law, we require brokers to tell families up front they're paid on the basis of the size of the mortgage they sell. That will put buyers on notice that they need to ask tough questions"

Among the elements of her plan is a ban on prepayment penalties, to allow borrowers to refinance out of expensive mortgages, a $1 billion dollar federal fund to help states provider mortgage assistance to homeowners facing foreclosure, and allow government-sponsored lenders Fannie Mae and Freddie Mac to expand efforts to help troubled borrowers.