In a newly published policy paper, "Restoring Principles to the Housing Market: A Three-Part Strategy for Sub-prime Mortgage Reform," Hope Street Group, a policy exchange of professionals, executives, entrepreneurs, and leaders focusing on economic opportunity and prosperity, recommends a plan to assist Americans who have already lost their homes, protect homeowners at risk of losing their homes to foreclosure, and prevent predatory lending practices without extensive federal bailouts or potentially eroding the returns of mortgage-backed securities.

A Three-Part Strategy to Address the Sub-prime Mortgage Crisis without Passing Costs on to Taxpayers or Investors

Washington DC – January 17, 2008 – In a newly published policy paper, "Restoring Principles to the Housing Market: A Three-Part Strategy for Sub-prime Mortgage Reform," Hope Street Group, a policy exchange of professionals, executives, entrepreneurs, and leaders focusing on economic opportunity and prosperity, recommends a plan to assist Americans who have already lost their homes, protect homeowners at risk of losing their homes to foreclosure, and prevent predatory lending practices without extensive federal bailouts or potentially eroding the returns of mortgage-backed securities.

In 2007 the homeownership rate dropped by more than it has in 25 years, and in 2006 the U.S. experienced its highest foreclosure rate since the Great Depression.  With 2.2 million households still facing foreclosure in the coming years, something must be done to address the issue before it pulls the entire economy into recession.  Hope Street Group does not recommend providing aid to Americans who simply over-extended themselves to buy homes or haphazardly used equity to support lifestyles they could not afford.  Instead, aid should be focused on those who were victims of mortgage fraud and those who:

• Have proven themselves financially responsible, regardless of credit score;
• Have a maximum household income of 120% of the area median income; and
• Are at risk of losing their primary residence.

A THREE PART STRATEGY

Assist those who have lost their homes by: 1) ensuring access to capital to rebuild their lives, 2) supporting state and local housing and financial counseling programs, 3) expanding the New Markets Tax Credit, and 4) creating a Neighborhood Improvement Emergency Fund.

Protect homeowners who are at risk of losing their homes to foreclosure by allowing borrowers to extend the life of their loans and by enacting the Family Foreclosure Rescue Corporation.

Prevent unprincipled lending by outlawing pre-payment penalties and loan acceleration on a primary residence, modifying home equity lending, and increasing federal oversight of mortgage brokers.

Hope Street Group (HSG) represents a new generation of professionals, executives, and entrepreneurs dedicated to revitalizing the American Dream by promoting economic opportunity and prosperity for all Americans.  Hope Street Group Policy Papers are written by volunteers supported by Hope Street Group staff.  Papers typically synthesize positions from think tanks of the left and right, and are intended to be user-friendly tools for busy decision-makers to more easily promote opportunity and prosperity.  To learn more, visit http://www.hopestreetgroup.org.