Sen. Barbara Boxer this afternoon released a 15-point plan she thinks will help stop foreclosures in California.
“Time is not our friend,” Boxer said during a telephone press conference. “We are in a crisis, and we need to stop the bleeding.”
Boxer expressed specific concern about the 8,000 homes lost to foreclosure last year in Merced, Stanislaus, and San Joaquin counties. That was approximately 1 of every 50 homes in the region.
“What you have is a vicious cycle because as values go down, it doesn’t pay for people to stay in their homes (or try to avoid foreclosure),” Boxer said.
She said foreclosed homes too often are abandoned without maintenance and become eyesores. “If a neighborhood starts going downhill, the home prices keep going down.”
Those lower prices then cause more foreclosures
“We’ve got to stem the tide,” Boxer said. “We’re in a downward spiral, and if this is allowed to free fall ... there’s no telling the impact it will have on communities.”
Here’s Boxer’s 15-point action plan for stopping the foreclosures:
- Turn foreclosure roundtables into ongoing community working groups to address the crisis in the months and years ahead.
- Ensure that new Department of Housing and Urban Development funding for counseling reaches California communities quickly and effectively, and that HUD and the Federal Housing Administration are working to ensure that California borrowers are able to access their full range of products and services.
- Work closely with the HOPE NOW coalition and major California lenders and servicers to ensure they live up to the commitments they have already made to freeze interest rates and speed up the review and modification process. HOPE NOW is an alliance of counselors, investors, lenders and servicers that is working to maximize outreach efforts to homeowners in distress.
- Congress should immediately explore initiatives that would freeze interest rates for borrowers in danger of foreclosure.
- Allow bankruptcy judges to modify unaffordable mortgages on a homeowner’s primary residence, the same power judges already have for vacation homes or investment property.
- Insist that the U.S. Federal Reserve and the Office of Thrift Supervision require Bank of America and Countrywide Financial to demonstrate significant progress in modifying loans as a condition of approving their merger.
- Advocate new Community Development Block Grant funds for the purchase and rehabilitation of foreclosed properties. Funds should go to local governments in the most affected areas and could be used to maintain or purchase foreclosed homes in order to preserve and protect our communities.
- Advocate additional funding for nonprofits to help existing and future borrowers by providing foreclosure prevention activities, including counseling and legal services, training and capacity building, and pre-purchase counseling for all subprime loans.
- Advocate for the higher loan limits for FHA, Fannie Mae and Freddie Mac qualifying loans. The Senate-passed FHA modernization bill would raise FHA loan limits from the current $362,790 up to a maximum of $417,000, while the House-passed bill would allow for FHA loans up to nearly $830,000.
- Expand the Federal Trade Commission’s enforcement authority to cover unfair and deceptive acts and practices committed by federally chartered depository institutions, which are currently governed by the federal financial regulators. FTC already has enforcement authority over non-depository institutions.
- Support local government requirements that lenders maintain foreclosed properties.
- Establish licensing and registration requirements for all loan originators and provide funding for anti-fraud enforcement activities.
- Request a Government Accountability Office study on different options to establish a land trust to purchase the land beneath foreclosed properties and allow existing structure to be resold to homeowners at reduced price.
- Require that homeowners be notified whenever their loan is sold so that the holder of the loan can be easily identified and contacted.
- Provide funding for and encourage high school financial literacy programs.