April 26, 2008
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HOME OWNERSHIP
Protect Homeownership and Crack Down on Mortgage Fraud
Create a Universal Mortgage Credit:
Obama will create a 10 percent universal mortgage credit to provide tax relief to homeowners who do not itemize. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.Ensure More Accountability in the Subprime Mortgage Industry:
Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama’s STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.Mandate Accurate Loan Disclosure:
Obama will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.Create Fund to Help Homeowners Avoid Foreclosures:
Obama will create a fund to help people refinance their mortgages and provide comprehensive support to innocent homeowners. The fund will be partially paid for by Obama’s increased penalties on lenders who act irresponsibly and commit fraud.Close Bankruptcy Loophole for Mortgage Companies:
Obama will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments. Obama believes that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.Address Predatory Credit Card Practices and Reform Bankruptcy Laws
Create a Credit Card Rating System to Improve Disclosure:
Obama will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card’s features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.Establish a Credit Card Bill of Rights to Protect Consumers:
Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:• Ban Unilateral Changes
• Apply Interest Rate Increases Only to Future Debt
• Prohibit Interest on Fees
• Prohibit “Universal Defaults”
• Require Prompt and Fair Crediting of Cardholder Payments
Cap Outlandish Interest Rates on Payday Loans and Improve Disclosure:
Obama supports extending a 36 percent interest cap to all Americans. Obama will require lenders to provide clear and simplified information about loan fees, payments and penalties, and he’ll require them to provide this information during the application process.Encourage Responsible Lending Institutions to Make Small Consumer Loans:
Obama will encourage banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small-dollar loans and to drive unscrupulous lenders out of business.Reform Bankruptcy Laws to Protect Families Facing a Medical Crisis:
Obama will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets Americans get back on their feet.
