Dear Mayor:

On Friday, President Bush outlined a federal response to the sub-prime mortgage crisis. “We've got a role, the government has got a role to play -- but it is limited,” said the President. “A federal bailout of lenders would only encourage a recurrence of the problem.  It's 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.  Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders, or a little help from their government.  So I strongly urge lenders to work with homeowners to adjust their mortgages.  I believe lenders have a responsibility to help these good people to renegotiate so they can stay in their home.”

The President went on to list four steps to be taken at the Federal level.

• “First, we're going to work to modernize and improve the Federal Housing Administration …”
• “Second, I'm going to work with Congress to temporarily reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages during this time of market stress. … And to this end, I've called Senator Debbie Stabenow of Michigan and told her that she's on to a good idea with the bill that she and George Voinovich have submitted to the Senate.  The House has got Rob Andrews of New Jersey and Ron Lewis of Kentucky introducing legislation that is a positive step toward changing the tax code so people aren't penalized when they refinance their homes.”
• “Third, my administration will launch a new foreclosure avoidance initiative to help struggling homeowners find a way to refinance.”
• “Finally, the federal government is taking a variety of actions to make the mortgage industry more transparent, more reliable and more fair, so we can reduce the likelihood that these kind of lending problems won't happen again.”  Federal banking regulators are improving disclosure requirements to ensure that lenders provide homeowners with complete and accurate and understandable information about their mortgages, including the possibility that their monthly payments could rise dramatically.  In other words, we believe that if the consumer is better informed, these kind of problems won't arise -- are less likely to arise in the first place.”

The full text of the President’s statement is available at www.njslom.org/homeownership_financing.html. We will keep you posted on further developments.

                                                                        Very truly yours,

                                                                        William G. Dressel, Jr.
                                                                        Executive Director