As the foreclosure crisis continues, California House Democrats are revealing their frustration with the Obama administration for not doing more, such as refinancing mortgage plans and lowering the balance for underwater mortgages.
Homeowners continue to be forced out of their homes due the the rising foreclosure crisis. The Obama administration's failure to develop a definite plan for refinancing mortgages or a workable loan modification initiative is being criticized by California House Democrats.
Obama Administration Doesn't "Get It"
According to the LA Times, Rep. Dennis Cardoza of Atwater stated at a Capitol Hill news conference, “They don't get it. The administration has simply not done a darn thing to help my constituents.”
Rep. Mike Thompson of St. Helena agreed, saying, “Everything to date, as well intended as it may have been, has not provided the assistance that we need.” Thompson added there should be an end to the “absolutely asinine” policy that requires homeowners to miss a mortgage payment before they can qualify for a loan modification.
Since the financial crisis in 2008, housing advocates have pushed for a solution to the rising number of foreclosures. The Democratic delegation sent a letter to President Obama, calling on him to take steps to finally help resolve this problem.
The letter stated, “We continue to hear from our constituents that servicers are uncooperative, misleading and even deliberately obstructive, and we have not seen successful efforts from your administration in response. Until the housing market is stabilized, our economy will not be able to fully recover.”
Changes Called for By California House Democrats
Changes called for include refinancing mortgages guaranteed or owned by Fannie Mae and Freddie Mac. There is also a push to allow the principal on underwater mortgages to be written down through bankruptcy to avoid ongoing foreclosures. Also requested was a “Homeowners Bill of Rights.” This would require mortgage service companies to review documents in a timely manner and make other changes to benefit consumers.
President Obama did call for the federal regulators overseeing housing finance giants Fannie Mae and Freddie Mac to let more homeowners refinance their mortgages. However, little progress is actually being made with areas such as California and Nevada being hit hard by the housing crisis.
Democrats are further complaining they requested a meeting with Vice President Joe Biden months ago and still did not get a response. Rep. Jim Costa of Fresno said Obama recently gave a speech to Congress promising to help “responsible homeowners” refinance their mortgages. Costa indicated, “we're still looking for a plan.”
The White House Responds
The White House offered a response on Wednesday night through spokesperson Adam Abrams. “The President is focused on taking steps to help struggling homeowners, especially in states hardest hit by the housing crisis.” Efforts to be made include 12 months of mortgage forbearance to unemployed borrowers, turning vacant property into rental housing and getting rid of barriers to let “more responsible borrowers to refinance into lower interest mortgages.”
The California House Democrats are led by Rep. Zoe Lofgren of San Jose, chair of the state's Democratic House delegation. Almost all of the state's 32 Democrats signed the letter to President Obama urging him to take immediate action.
The “Banks Are Going To Eat a Loss”
The SF Gate reports Rep. Zoe Lofgren said the current mortgage crisis is “crippling” California, the state with the second-highest foreclosure rate in the country. Nevada has the highest foreclosure rate in the nation.
Lofgren said the banks are resisting efforts to write down the mortgage loans for “underwater” houses that are worth less than the amount of the loan. She stated, “The banks are going to eat a loss. The only question is when. Deferring action on taking the losses is putting the entire economy at risk.” Many people are accusing mortgage owners of dragging their feet to avoid the situation, putting off until tomorrow what should be done today.
The actions recommended would be at no cost to the taxpayers. They would also let homeowners remain in their houses and lower their monthly mortgage payments. Lofgren also indicated Fannie Mae and Freddie Mac are “losing their shirts in foreclosures.” Refinancing mortgage plans would save the government money. Foreclosures leave taxpayers on the hook for the loans backed by these agencies.
House Republicans did not sign the letter to President Obama. Despite this fact, Sen. Johnny Isakson, R-Ga., teamed with California Democrat Sen. Barbara Boxer to push for similar measures.
Photo from Wikimedia Commons
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