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House members urge Obama to act on housing

More than two dozen California House Democrats – including almost the entire Bay Area delegation, and led by three Bay Area members – have urged President Barack Obama to make a recess appointment that could bring a national mortgage-refinancing wave which in turn could stave off countless foreclosures.

Reps. Anna Eshoo, D-Palo Alto; Zoe Lofgren, D-San Jose; and Mike Thompson, D-Napa led the effort to convince the president to appoint a new director to the Federal Housing Finance Agency, which oversees mortgage backers Fannie Mae and Freddie Mac; the FHFA has been without a permanent director for two and a half years.

“Republicans in the Senate have been playing games with the American people by blocking the Federal Housing Financial Authority from having a proper leader,” Lofgren said in a news release. “These are difficult times and we need to be doing everything we can to prevent foreclosures and keep families in their homes. I urge President Obama to take immediate action and appoint a permanent director.”

As the Washington Post’s Ezra Klein blogged yesterday, there’s some bipartisan consensus that “the agency could write the rules so that anyone with a loan backed by Fannie and Freddie and current on their payments for six months would be automatically approved for refinancing.”

“The effect on the economy would be twofold: First, the refinancings would act like a high-powered tax cut for those homeowners who took advantage of them,” Klein wrote. “As Hubbard and Mayer write, ‘Empirical evidence suggests that consumers spend a larger portion of permanent increases in income than temporary increases.’ And as these refinancings would lower payments, they’re as permanent as you can get in government policy. Second, it would make the Fed’s efforts to keep interest rates low more effective in stimulating the economy.”

More than two million California homeowners are considered “underwater” because they owe more on their homes then their homes are worth; that’s about three in 10 of all California homes with mortgages.

Eshoo today said the national economy “cannot fully rebound unless and until housing is addressed. The current situation of foreclosures is unacceptable.”

Rep. Jerry McNerney, D-Pleasanton, issued a release noting this region has been disproportionately affected by the financial and housing crises.

“Families are faced with foreclosures, even as unemployment remains high. We can’t wait to have leadership to help folks stay in their homes,” he said. “Keeping folks in their homes is critical to the economic health of our communities. More has to be done to give people a clear path to avoiding foreclosure.”

The only Bay Area House member who didn’t sign the letter was House Minority Leader Nancy Pelosi, D-San Francisco.

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Lawmakers weigh in on new home refinance plan

Local members of Congress applauded President Obama ‘s announcement today of new policies meant to shore up the shaky housing market – a plan that could help a lot of Bay Area homeowners refinance “underwater” mortgages at historically low interest rates.

From U.S. Sen. Barbara Boxer, D-Calif.:

“I am very pleased that the administration is taking these steps to help responsible homeowners refinance at historically low interest rates. Allowing these homeowners to refinance at today’s record low rates will keep families in their homes and boost the economy by putting thousands of dollars back in the pockets of borrowers. I urge FHFA to move swiftly to assure that these new policies will help as many homeowners as possible.”

From Rep. Jerry McNerney, D-Pleasanton:

“I am glad that a step has been taken in the right direction. I hope this has a positive effect, but if it does not deliver, I will continue to hold the Obama Administration accountable and demand relief for homeowners. We must do more to help the people of California who have been plagued by the foreclosure crisis from day one.

“For far too long, I have heard heartbreaking stories from people in our region: tales of people doing everything they can, and still being foreclosed upon. I will continue to fight for more real, commonsense solutions to the housing crisis and to keep the pressure on the folks in Washington to help our community.

“We need to relieve some of the financial burden for homeowners who are ‘underwater,’ not only to more foreclosures, but to generate more money that will go into our local businesses. Helping the people of our region stay in their homes is step one to restoring our economy.”

From Rep. Anna Eshoo, D-Palo Alto:

“The President took a positive first step today to help address the catastrophic housing situation in the country. It’s not enough though. Up to a million families nationally could be helped, but there are two million underwater homeowners in California alone.

“We need meaningful principal reductions on a large scale. It’s time to implement a Homeowner’s Bill of Rights that ends dual-tracking and creates a single point of contact for borrowers. The size and scope of this housing crisis requires us to think big. Our nation’s economy simply will not recover until the crisis of foreclosures is over.”

From Rep. Jackie Speier, D-Hillsborough:

“Finally, relief for the middle class families of America! I applaud the FHFA for taking bold and needed action. I and many of my colleagues had appealed directly to Mr. DeMarco, the head of FHFA, to take these actions to refinance middle class America, and he has responded. In particular, the decision not to put a cap on the loan-to-value ratio that is eligible to be refinanced via a fixed rate mortgage will mean that potentially millions of homeowners will be eligible. Given that Fannie and Freddie are owned by taxpayers, this decision is a win for them as well. There are reduced odds of losses from the guarantees issued by these two agencies, and there is no cost to taxpayers because Fannie and Freddie will fund this refinancing activity through new bonds. If the wave materializes, it could also help to stabilize the housing market in neighborhoods where refinancing occurs frequently, and could potentially put thousands of dollars into the pockets of a strapped homeowner who refinances. All in all, I only wish that this process could begin immediately, but I understand that banks aren’t set up to handle a wave of applicants. Hopefully, competition between lenders will force them to participate in this new program and drive them to get set up rapidly.”

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Lawmakers urge Obama to act on housing

Much as the state’s U.S. Senators did yesterday, members of the California Democratic Congressional Delegation today urged President Obama to act immediately to address the troubled housing market.

The letter, drafted by delegation chairwoman Rep. Zoe Lofgren, D-San Jose, calls on President Obama to urge the Federal Housing Finance Agency to establish a plan to refinance all mortgages owned or guaranteed by Fannie Mae and Freddie Mac, and to push for a major principal reduction plan for underwater homeowners, such as modifications in coordination with Chapter 13 bankruptcy filings.

It also asks the president to institute a “Homeowner’s Bill Of Rights” that would apply to HAMP, FHFA, HUD, VA and private servicer modification programs. The lawmakers want this to make the process homeowner-friendly by ensuring a single point of contact; requiring servicers to review documents within a timely fashion and disclose information; and banning “advanced fees.” They also want it to eliminate obstacles to effective modifications by allowing for flexibility in the debt-to-income ratio; ending the requirement that homeowners be delinquent in order to be eligible for a loan modification; ending dual tracking; and requiring that servicers not report adverse credit information while trial or permanent modification is underway.

Finally, they want this bill of rights to ensure accountability and establish an appeals process by creating an Office of Consumer Advocate, authorizing random audits of modifications, and establishing an independent appeals process for homeowners who believe their modification has been improperly rejected or handled in violation of program rules.

Among those joining Lofgren at a Capitol Hill news conference announcing the letter this morning were Rep. Barbara Lee, D-Oakland; Rep. Pete Stark, D-Fremont; Rep. Jerry McNerney, D-Pleasanton; Rep. John Garamendi, D-Walnut Grove; Rep. Jackie Speier, D-Hillsborough; and Rep. Anna Eshoo, D-Palo Alto.

They all signed the letter, as did Rep. George Miller, D-Martinez; Rep. Mike Honda, D-San Jose; Rep. Lynn Woolsey, D-Petaluma; and other House Democrats from across the state.

Read the letter, after the jump…
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Senators urge dropping barriers to refinance

Both of California’s U.S. Senators are among more than a dozen from both sides of the aisle who urged the Obama Administration today to make administrative reforms to help millions of responsible homeowners refinance and take advantage of today’s record-low interest rates.

The lawmakers – writing to Housing and Urban Development Secretary Shaun Donovan, Treasury Secretary Timothy Geithner, National Economic Council Director Gene Sperling and Federal Housing Finance Agency Acting Director Edward DeMarco – said that with interest rates at 3.94 percent, it’s time to lower barriers that keep borrowers trapped in higher-interest loans and to address other hurdles that limit existing refinancing programs.

Specifically, they called for removing loan-to-value limits, which they said would provide the most at-risk borrowers an alternative to simply walking away from their mortgage; eliminating loan level price adjustments, which they say make a refinance less affordable, reduce the benefit to the borrower, and can’t be justified on loans on which Fannie Mae and Freddie Mac already bear the risk; and ensuring that second lien holders don’t stand in the way of a refinance.

“Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates,” they wrote.

In addition to U.S. Senators Barbara Boxer, D-Calif., and Dianne Feinstein, D-Calif., the letter was signed by Johnny Isakson, R-Ga.; Robert Menendez, D-N.J.; Mark Begich, D-Alaska; Jeff Merkley, D-Ore.; Sheldon Whitehouse, D-R.I; Debbie Stabenow, D-Mich.; Scott Brown, R-Mass.; Robert Casey Jr., D-Pa.; Richard Burr, R-N.C.; Frank Lautenberg, D-N.J.; John Kerry, D-Mass.; Mark Warner, D-Va.; Saxby Chambliss, R-Ga.; and Ron Wyden, D-Ore.

Read the full text of the letter, after the jump…
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Financial probe panel’s GOP members go rogue

Republican members of the Financial Crisis Inquiry Commission – a supposedly bipartisan panel that’s been probing the causes of the financial crisis that precipitated our recession – went rogue today and issued their own report (now posted at House Minority Leader John Boehner’s website), well before the entire commission is expected to issue its official report next month.

The commission, chaired by former California Treasurer and 2006 Democratic gubernatorial nominee Phil Angelides, has spent this past year holding hearings at sites across the country, subpoenaing documents and otherwise gathering evidence. It voted last month to delay its report from Dec. 15 until January.

The Republican commissioners – former Rep. Bill Thomas, R-Atascadero; Bush economic advisor Keith Hennessey; Douglas Holtz-Eakin, the top economic adviser to 2008 GOP presidential nominee John McCain; and Reagan White House Counsel Peter Wallison – decided not to wait, and Boehner immediately trumpeted the result.

“This eye-opening report details how government mortgage companies played a pivotal role in the financial meltdown by handing out high-risk loans to families who couldn’t afford them,” Boehner said in a statement issued this morning. “After years of being coddled and enabled by Washington politicians, Fannie Mae and Freddie Mac are now on life support, kept afloat by taxpayers fed up with unending bailouts.”

Boehner said Congressional Republicans’ “Pledge to America” proposes “saving billions for taxpayers by ending government control of Fannie and Freddie, shrinking their portfolios, and establishing minimum capital standards. I appreciate the Republican commissioners’ efforts to get to the bottom of what happened and ensure the American people have the full story about the financial crisis. This is a report every taxpayer should read.”

But Tom McMahon, executive director of the union-backed liberal group Americans United for Change, issued a scathing reply saying the Republican commissioners’ report whitewashes Wall Street’s role in the financial collapse.

“I know the Republicans are just trying to protect their big banker buddies, but let’s give a little credit where credit is due. It was Wall Street that made bad bets with our money in the shadow banking system, which led to the lost of 8 million jobs and billions in retirement savings. No amount of revisionist history can change the enormous roll Wall Street played in this crisis,” McMahon said.

“Once again, it’s good to see these poor, helpless big banks have friends like Thomas and Holtz-Eakin on the Financial Crisis Inquiry Commission and in Congress like Boehner and incoming House Financial Services chair Spencer Bachus,” he added. “The notion that these Republicans are still blinded by the sheen of Wall Street proves how little interest they have in getting to the real source of the economic meltdown, preferring instead to rewrite history.”

FCIC spokesman Tucker Warren e-mailed out a statement later today saying the commission’s real report will be delivered next month to the President, Congress and public, as had been announced in November.

“The report will contain facts and evidence from the Commission’s more than year-long investigation – including 19 days of public hearings, an analysis of hundreds of thousands of documents and interviews with more than 700 witnesses. The report will also include the Commission’s findings and conclusions as to the causes of the financial crisis based on this inquiry,” the statement said.

“Today some members of the Commission made public their personal views on the financial crisis. The Commission had not previously seen or had an opportunity to review what was released today. But, as it does with the views of any of its members, the Commission will review and take them into consideration.”

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Tom Campbell rolls out federal budget plan

Republican U.S. Senate candidate Tom Campbell just held a conference call with reporters to walk us through his federal budget plan, which would produce a $562 billion deficit in FY 2011 – far less than the $1.27 trillion deficit contemplated by President Obama’s plan.

The White House’s budget would let non-defense discretionary spending grow from $581 billion this fiscal year to $670 billion in the next. Campbell wants to cap it at this year’s level, perhaps by eliminating $3 billion in annual spending on corn ethanol subsidies and by selling off Freddie Mac and Fannie Mae.

Of $585 billion in not-yet-spent economic stimulus money under the American Recovery and Reinvestment Act, Campbell would take half and use it to cut payroll taxes for employers hiring new employees who’ve been out of work for at least two months. And rather than spending another $100 billion on the jobs bill now making its way through Congress, Campbell would redirect that money to pay down the national debt.

He’d do the same with $200 billion in money returned by banks from the Troubled Asset Relief Program (TARP); President Obama wants to spend that money to stimulate small-bank lending.

And he’d trim $45 billion out of Medicaid and the State Children’s Health Insurance Program by letting them grow only enough to cover all who are eligible and to keep up with the general inflation rate. Instead of presuming Medicaid will cover everything, he calls for using this money and the states’ contributions to buy insurance policies for the eligible at a fixed price, flexing the government’s buying-power muscle to get a better deal.

“Overall, you have to say this is how much we have to spend, and no more,” he said, adding he rejects President Obama’s proposals to impose a fee on banks bailed out by TARP and to let the Bush Administration’s tax cuts for the rich expire. “I think that would be a mistake in the current economic circumstances.”

GOP Senate primary rival Carly Fiorina has blasted Campbell for having supported tax increases at times in the past. He said today that as a gubernatorial candidate last year he proposed $3 in spending cuts for every $1 he’d have raised through a temporary gas-tax increase, and had his plan been adopted, Californians would be better off.

But the state and federal budgets are like apples and oranges, he said; the state can’t print money, yet must maintain prisons, schools, roads and other programs without fail.

Asked about Fiorina’s now-notorious “demon sheep” Web video, Campbell said his only reply is “this news conference and the substantive work I’ve done on the budget, that returns the campaign to serious discourse.” (Of course, today’s high road aside, it was only a few days ago that his campaign had some choice words for Fiorina’s ad, and that Campbell himself touted it as a fundraising aid.)

He wouldn’t announce any fundraising numbers, although he said it’s going “exceptionally well” – many who weren’t supporting him for governor are now supporting him for the Senate. He’s contemplating doing fundraising events in New York and Washington, D.C., he said, but no dates have been set yet.

UPDATE @ 4:37 P.M.: Fiorina is irked by Campbell’s comments. From campaign spokeswoman Julie Soderlund:

“It’s encouraging to see that Tom Campbell has finally realized what a huge problem his well-documented and long-standing support for higher taxes is going to be in this campaign. What is also going to be a problem is his continued attempts to misrepresent his record and deceive voters. Unfortunately, facts are stubborn things, and the facts in this case are clear: Carly does not support higher taxes on the Internet or otherwise. Tom Campbell supports taxing the Internet – and has for a long time – and he also supports higher gas taxes, sales taxes, car taxes, and the list goes on.”

Actually, Campbell didn’t say his support of last year’s unsuccessful Proposition 1A – which would’ve coupled a spending cap and a rainy-day fund with one- or two-year extensions in sales, income and car tax hikes – was “a huge problem.” He called it a show of “pragmatism” in which he believed “the overall good is worth the short-term harm,” and he said he believes most Republican voters would agree.

As for Fiorina not supporting “higher taxes on the Internet or otherwise,” I’m not sure how that jibes with the report filed yesterday by KGO television’s Mark Matthews, which said Fiorina in June 2000 acknowledged “(i)t’s not realistic of our industry to stand and say this taxation should never be applied to e-commerce,” and urged states to “(b)ring our taxation system into the modern age so that we can tax in a fair way both on line and offline transactions.”