Paulson opposes courts altering mortgages

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said on Wednesday he did not like the idea of amending terms of contracts for people who are pushed into bankruptcy because they fall behind on their mortgages.

"As a matter of property rights in contract, I don't like the idea of retroactively changing contracts and I'm concerned with what it might do for financing availability going forward," Paulson said in response to questions at a Senate Appropriations subcommittee.

Paulson added there is a plan available to bring homeowners who are facing payment problems together with lenders to seek relief, adding: "It's a lot quicker than slowing it down and bogging down our courts."

The U.S. Treasury chief stressed that he was far more in favor of providing assistance for homeowners to meet their lenders and try to agree on whatever amendments were needed to keep up payments.

"I am emphasizing a program that says if you're a homeowner and you want to stay in your home and you can afford to stay in your home, raise your hand, call or reach out to someone," Paulson said.

He told a questioner that he did not disagree with suggestions that the pace of foreclosures will increase but denied there was any comparison between current conditions and those of the 1930s Great Depression.

"There's been a lot that has changed since we went through the Depression and foreclosures were at 50 percent and unemployment was at 25 percent," Paulson said. He said current foreclosures were running at 2 percent.

"When you say you think it's going to get worse, I'm not arguing with you," Paulson said. "I've said I think those forecasters who say they think this period of adjustments is going to take longer to run its course, I agree with them," he conceded.

(Reporting by Glenn Somerville; Editing by Neil Stempleman)