Presidential candidate Hillary Clinton unveiled a new four-part mortgage relief plan at a speech before 150 elected officials and students at the University of Pennsylvania yesterday. The plan calls for immediate action and direct government intervention.

Senator Hillary Clinton has been proposing ideas to provide foreclosure relief for more than a year now. On Monday, she added to those proposals, calling for $30 billion and government intervention.

Her new four-part plan, which includes some of her previous proposals, is the most aggressive plan floated by a presidential candidate so far. In addition to interest rate freezes and a foreclosure moratorium, Clinton wants to see a $30 billion fund that will allow cities and states to improve neighborhoods by buying foreclosed properties.

To encourage loan restructuring, she suggested mortgage servicers be given more protection against lawsuits from investors. According to her, evidence suggests servicers are less willing to modify mortgages because they fear litigation.

Clinton also stated that she would support controversial legislation recently introduced by Representative Barney Frank (D) and Senator Christopher Dodd (D) that calls for $20 billion in public funds to establish a federally backed mortgage auction. 

Other ideas she mentioned included a huge expansion of the Federal Housing Administration (FHA) and an emergency, non-partisan “working group” that could brainstorm new ways to prevent more foreclosures. She recommended tapping economists, as well as former Federal Reserve chairmen Alan Greenspan and Paul Volcker and former Treasury Secretary Robert Rubin to lead the group.

Her speech comes as the mortgage crisis threatens to overwhelm the economy. The latest statistics show that nearly one million people are facing foreclosure, and more trouble is expected as rates reset and home prices continue to fall.

Senator Barrack Obama’s campaign issued a statement after Clinton’s speech to say that Obama is also working to ease the credit crisis. He too has suggested a “homeownership preservation summit,” expansion of the FHA and a larger mortgage bond program.

Other ideas Obama has come out with previously include stiffer penalties for predatory lenders and a simplified tax code that will allow more people to benefit from the mortgage income tax credit.

Republican presidential candidate John McCain is traveling down a different road. Today, he warned against government intervention, saying it is not the “duty of the government” to bailout irresponsible borrowers or lenders.

Breakdown of Hillary’s Proposals

• 90-day foreclosure moratorium
• Freeze the interest rates on subprime ARMs for at least five years
• Allow the FHA to guarantee up to $400 billion in refinanced mortgages
• Put underwater mortgages on the government’s balance sheet on a temporary basis
• Introduce legislation to protect mortgage servicers from investor lawsuits
• Create a $30 billion stimulus package to allow cities and states to purchase foreclosed properties
• Set aside $10 billion to expand the mortgage revenue bond program
• Create a “high-level emergency working group” to brainstorm more ideas to help ease the foreclosure crisis