Remarks by Treasury Secretary Paulson

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We learned that mortgage industry leaders had already stepped-up their efforts to reach delinquent borrowers, but many borrowers in trouble were afraid to speak to their lenders. Borrowers did respond more favorably to mortgage counselors, but the counselors didn't know which borrowers most needed assistance. Treasury and HUD helped bring these two groups together in the HOPE NOW alliance—a coalition of mortgage servicers, counselors and investors that are working to avoid preventable foreclosures and to improve the functioning of the mortgage markets.

Since its formation less than two months ago, the HOPE NOW alliance has made significant progress. In the past, some servicers may not have contacted borrowers until after their loans were delinquent. Today, all HOPE NOW servicers are contacting borrowers 120-days in advance of their mortgage reset, to reach them early, before their mortgage problem becomes overwhelming. For those troubled borrowers that servicers haven't been able to reach, HOPE NOW has launched a nationwide letter campaign. These simple, one-page letters, on HOPE NOW letterhead, provide a toll-free hotline which homeowners can call to explore options with their servicer that may help them keep their home.

Mortgage investors recognize that foreclosure is costly and often not in their interest. And they recognize that quality mortgage counseling can help prevent foreclosures. By bringing together counselors, servicers and investors, the HOPE NOW alliance has brought the resources of investors to bear to enable non-profit mortgage counselors to be more widely available. The Alliance is scaling up a national hotline that borrowers can call for mortgage counseling. And let me say to those listening out there—if you are worried about losing your home, call this number, 1-888-995-HOPE, to see if you are eligible for assistance. This hotline is available 24-hours a day to provide vital mortgage counseling in multiple languages. Nothing is worse than doing nothing.

The HOPE NOW effort to streamline refinancings and modifications is a positive step, but it is not a silver bullet. There is no single solution to address all of the issues currently affecting the housing and mortgage markets.

The government has a role to play, as well. First, we need to draw attention to these letters and urge borrowers who receive them to act on them. Secretary Jackson and I have been doing just that, recently we sent copies of these letters to all Members of Congress so they can alert their constituents. We are asking governors and mayors to do the same. We will also join HOPE NOW's efforts to broaden its public service announcement campaign, to spread the word that hope is but a phone call away.

While increased industry funding is very important, we also need to do our part to support non-profit mortgage counseling organizations. For this public outreach campaign to be successful there must be enough trained mortgage counselors to answer the phone when homeowners call. The Administration requested funding for NeighborWorks America and other non-profit mortgage counseling operations in its budget. But the appropriations bill has yet to be finalized; Congress needs to get it done quickly.

Increase Availability of Affordable Mortgage Solutions

Of course, reaching homeowners is only part of the equation. The second part of our action plan is to make more mortgage products available for borrowers who have the financial wherewithal to own a home, but are struggling with the higher adjusted rate on their subprime mortgages. To help with this, the industry is looking at several innovative solutions—including both modifications and refinancings. State and local governments, especially in the hardest hit areas, are also developing solutions, including proposing funds that may help financially-able borrowers refinance out of expensive subprime loans.