California Democrats urge mortgage investigation

Rep. John Garamendi, D-Walnut Grove, joined fellow California Democrats today and sent a letter to President Barack Obama urging federal support for an investigation into mortgage fraud.

California and Nevada attorney generals have teamed up to crack down on mortgage fraud.

Here’s what Garamendi’s office just sent out:


WASHINGTON, DC – Congressman John Garamendi (D-Fairfield, CA) yesterday joined more than 30 Congressional Democrats from California in sending a letter to President Barack Obama urging the Administration to support California Attorney General Kamala Harris’ efforts to investigate and crack down on fraud in the mortgage industry. Congressman Garamendi’s district was especially hard hit by the housing crisis and Great Recession. Solano County continues to have the nation’s second-highest foreclosure rate, and Contra Costa County communities like Antioch and Oakley have also been hard hit by foreclosures.

“The abuses and fraud need to be fully investigated, and I commend Attorney General Harris for taking appropriate leadership in helping homeowners,” Garamendi said. “I hope the President uses the power of his Administration to aid Harris. We need to make sure that these rip off artists are exposed for their crimes, and to whatever degree we can help working families keep their homes, we should.”

32 California Democrats signed the letter to President Obama. Text of the letter is below. A pdf of the letter, including signatories, is available here.

Dear President Obama:

California homeowners, and those throughout the country, continue to suffer as a result of the irresponsible and fraudulent actions of the mortgage industry.  We write in support of California Attorney General Kamala Harris’ continued investigation into the potential misconduct and fraud by the mortgage industry.  Her determination to provide meaningful relief for California homeowners led to her decision in October 2011 to leave the multi-state settlement negotiations with the major banks.  Attorney General Harris recently announced that she would be aligning her efforts with Nevada’s, with each state committing more resources and energy towards holding the mortgage industry accountable for their actions. 

In October 2011, California ranked second in the country, behind Nevada, in percentage of housing units that entered the foreclosure process—with nearly one in every 243 California homes entering the foreclosure process in that month alone.  We know that California has been home to a myriad of abuses as we catalogued numerous constituent cases in a letter we sent to your Administration last year urging an immediate investigation. 

We support Attorney General Harris’ recent decision to pursue an independent investigation.  We believe that any meaningful settlement must provide assistance for struggling homeowners—particularly those underwater—and should not grant banks a broad release from liability for abuses that have not been investigated and are not remedied by the settlement.  The current multi-state settlement under review would relieve the banks of further liability without fully investigating the alleged wrongdoings.  Furthermore, it would not provide meaningful relief to homeowners as it would apply to only 13% of the mortgages serviced by banks nationwide.  It would likely result in $5 billion in penalties to mortgage servicers, with the rest of the settlement coming in the form of non-cash accounting losses that servicers would have experienced anyway, as the borrowers they declined to assist went into foreclosure.  We can and we must do better for our constituents.

Attorney General Harris’ commitment to delivering a fair outcome for those who have been wronged by the mortgage industry should be commended.  We hope that you will join her and advocate for stronger terms that will have a real impact for hard-working Americans who were victimized by the mortgage industry. 



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.”


Lawmakers urge banks to allow aid for jobless

Five Northern California members of Congress are pressuring mortgage servicers to work with a new federally funded program in California intended to help unemployed homeowners pay their mortgages and avoid foreclosure.

The Keep Your Home California Unemployment Mortgage Assistance Program provides qualified unemployed homeowners up to $3,000 a month for up to six months to help pay their mortgage. But according to the office of Rep. George Miller, D-Martinez, if the monthly mortgage exceeds $3,000, the servicers won’t accept any payment at all, even if the homeowner could send a second check to cover the difference between what is owed and what the program covers. As a result, unemployed homeowners who could avoid foreclosure proceedings thanks to this program are instead at risk of failing to pay their mortgage and landing in foreclosure.

“If this program is to have meaningful success, mortgage servicers are going to have to get on board with processing these payments,” Miller said in a news release. “Refusing to accept dual payments is unacceptable and is a disservice to the homeowners who are doing everything they can to stay in their homes while they look for work. Homeowners shouldn’t have to forfeit their homes because of bureaucratic intransigence by banks and servicers.”

Rep. Zoe Lofgren, D-San Jose, another of the letter’s signers, said “it’s time that banks and servicers become part of the solution and not the problem.

“It’s ridiculous that servicers and banks are unwilling to participate in a program that will help protect the value of the very asset on which their loan is based on,” she said. “I find it deeply troubling that servicers would have borrowers default rather than simply accepting payment.”

In their letter – also signed by Rep. John Garamendi, D-Walnut Grove; Rep. Jackie Speier, D-Hillsborough; and Rep. Sam Farr, D-Santa Cruz – they wrote that, “we believe refusing to accept supplementary payments from homeowners is inexcusable and we strongly urge you to remedy this problem expeditiously… It is unacceptable that servicers in California are unwilling or unable to figure out a workable resolution to this problem, particularly given that two viable options to address the issue exist.”

Those options, they say, are either to accept two checks (one from the program and one from the homeowner) or to forebear the amount of the mortgage that exceeds the $3,000 program payment.


California gets foreclosure-prevention funding

State Housing Finance Agencies (HFAs) in California and four other states can start using $1.5 billion in “Hardest Hit Fund” foreclosure-prevention funding under plans approved by the Obama Administration, the Treasury Department announced this morning.

President Obama established the fund in February to provide targeted aid to families in the states hit hardest by the housing downturn. The states approved to receive aid today as part of the first round of funding each experienced a 20 percent or greater decline in average housing prices.

Each state HFA gathered public input and created Hardest Hit Fund programs designed to meet their own states’ unique challenges. The plans were submitted to the Treasury Department in April, and the approved states can now set up and roll out their programs.

California’s share is $699.6 million, with which the state will implement its plan:

    Unemployment Mortgage Assistance (UMA) – Intended to help homeowners who have lost their jobs. CalHFA will provide a temporary mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds could provide up to six months of benefits with a monthly benefit of up to $1,500 or 50% of the existing total monthly mortgage, whichever is less.
    Mortgage Reinstatement Assistance Program (MRAP) – Intended to help homeowners who have fallen behind on their mortgage payments. CalHFA will provide limited money to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures – up to $15,000 per household or 50 percent of the past due amount, whichever is less, with a required dollar-for-dollar contribution match from the lender, servicer, insurer and/or borrower.
    Principal Reduction Program (PRP) – Intended to help homeowners who have severe negative equity – or are “underwater,” in the common slang. CalHFA will put up money, matched by participating financial institutions, to reduce outstanding principal balances of qualifying underwater borrowers. Principal balances will be reduced to market levels needed to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program should most likely be a prelude to loan modification.
    Transition Assistance Program (TAP) – Intended to help stabilize communiteis by giving homeowners help in relocating when it’s determined that they can no longer afford their home. CalHFA’s transition assistance will be used along with servicer/investor short sale and deed-in-lieu of foreclosure programs to help borrowers transition into stable and affordable housing elsewhere. Borrowers will be responsible to occupy and maintain the property until the home is sold or returned to the lender as negotiated. Funds will be available on a one-time only basis.

House Education and Labor Committee Chairman George Miller, D-Martinez, issued a news release praising the funding.

“Every family in our community has felt the effects of this severe economic recession and the problems in California’s housing market,” he said. “People have lost their jobs and their homes through no fault of their own. This new federal program is intended to help homeowners in our state and to help stabilize our economy.

“Of course there is more to do, and we’re continuing our work in Congress to save and create good American jobs to turn the economy around and get people back on their feet. In the end, the best way to help avoid foreclosure is to get more Americans back to work. We’re making progress in that direction but that remains our top priority.”

The other states cleared for funding today were Arizona, Nevada, Michigan and Florida.


Bad news for the special-election measures

The Public Policy Institute of California’s latest poll shows that as interest has grown in the May 19 special election, opposition has grown to the ballot measures with five of the six headed for defeat:

  • Prop. 1A, the spending cap/rainy-day fund: 52 percent no, 35 percent yes
  • Prop. 1B, restoring money cut from education: 47 percent no, 40 percent yes
  • Prop. 1C, borrowing against future lottery income: 58 percent no, 32 percent yes
  • Prop. 1D, diverting money from children’s programs: 45 percent no, 43 percent yes
  • Prop. 1E, diverting money from mental health: 48 percent no, 41 percent yes
  • Prop. 1F, preventing raises for state officials when the budget is in deficit: 73 percent yes, 24 percent no
  • “The voters who are really tuned in are really turned off,” PPIC president, CEO and survey director Mark Baldassare. “They see the state’s budget situation as a big problem, but so far, they don’t like the solution.”

    PPIC found voters most likely to be following news of the special election very closely are older than age 55, men and those who disapprove of the governor and legislature.

    That latter category would be most of you, apparently: The poll found the governor (34 percent) and legislature (12 percent) at almost-record-low approval ratings. Californians feel less trust in state government now than PPIC has ever seen: Just 16 percent of likely voters say they can trust the government in Sacramento to do what is right just about always (2 percent) or most (14 percent) of the time. Among Californians overall, 23 percent hold this view (4 percent always, 19 percent most of the time).

    But it’s not all gloom and doom. For the first time since PPIC started asking in 2003, most Californians – 57 percent – and most likely voters here – 52 percent – think the nation is generally headed in the right direction. That’s a marked increase even from when January, when it was 32 percent of Californians and 31 percent of likely voters. (Apparently, yes he can!)

    The findings are based on a telephone survey of 2,005 adult Californians interviewed from April 27 through May 4 in English or Spanish; the margin of error all adults is ±2 percent, and for the 1,080 likely voters, it’s ±3 percent.

    More PPIC tidbits, after the jump…
    Continue Reading


    Tauscher, other local Dems praise foreclosure bill

    New Democrat Coalition chairwoman Ellen Tauscher, D-Alamo, has been getting no love from the liberal netroots – see here, here and here for examples – over her role in H.R. 1106, the foreclosure-prevention legislation. That didn’t stop her from expressing joy as the bill passed the House today on a 234-191 vote.

    “I am pleased that the House approved the Helping Families Save Their Homes Act. This is one component of a very large effort to stabilize the housing market and limit the number of home foreclosures in California and across the country,” she said in a statement issued this afternoon. “Accessible and sustainable loan modifications are essential to getting millions of families the tools they need to stay in their homes.”

    Her news release said she “played a leading role in improving the bill, which is a key part of President Obama’s Making Home Affordable program, so that homeowners can first and foremost access a loan modification plan and, allowing homeowners in the most dire of circumstances, to seek relief through bankruptcy as a last resort.” She also “inserted language into the bill to prevent homeowners who can afford their loans from abusing the system by filing for bankruptcy just to capitalize on falling real estate prices,” the release said.

    Other, more liberal Bay Area House members gave the bill similarly rosy reviews. Read ‘em, plus the GOP’s take, after the jump…
    Continue Reading