Democratic presidential candidate Hillary Clinton proposed new requirements for lenders and an end to prepayment penalties for home mortgages as part of a plan to combat a growing number of defaults in the U.S.
``We need to act now with smart, practical solutions,'' Clinton said today during a campaign stop in Derry, New Hampshire. ``We need to put an end to fly-by-night mortgage brokers peddling loans to unqualified applicants based on inflated appraisals.''
The number of mortgages entering foreclosure in the U.S. reached a record in the first quarter as defaults spread from ``subprime'' borrowers with bad credit to people with reliable records. Clinton, a New York senator, spoke a day after American Home Mortgage Investment Corp. filed for bankruptcy, becoming the second-biggest residential lender in the U.S. to do so this year.
Clinton, 59, said she will introduce legislation in September that would ban penalties for people who pay off their mortgages ahead of time and require federal registration of mortgage brokers and greater disclosure of their fees. She would also set up a $1 billion fund for state programs that help borrowers avoid foreclosure and urge Fannie Mae and Freddie Mac, which operate under a federal charter, to do more on the issue.
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