SoCal Democrats Call On Obama To Refinance All ‘Underwater’ Mortgages

LOS ANGELES (CBS) — A group of nearly three dozen lawmakers from the Southland are joining a Democratic-led effort to push to refinance all mortgages currently owned by the federal government.

Reps. Brad Sherman (San Fernando Valley), Karen Bass (Los Angeles), Henry Waxman (Los Angeles), and  Judy Chu (El Monte) are among the 33 California Democrats who signed the letter calling on President Barack Obama to use the Federal Housing Finance Authority (FHFA) to refinance all Fannie Mae- and Freddie Mac-owned mortgages.

The letter urges the Obama administration to assist “struggling homeowners who were at the mercy of mortgage servicers” by taking advantage of historically low interest rates.

“Each foreclosure represents a missed opportunity for a family to stay in its home,” the letter reads. “We cannot afford to allow this to continue.”

Lawmakers pointed to recent report showing foreclosure notices in California had jumped 55 percent in August — the second-highest increase in the U.S.

The letter also proposes a temporary reduction in mortgage rates for those homeowners who file for Chapter 13 bankruptcy — a move that would essentially amount to interest-free payments for five years that would go directly toward reducing the borrower’s principal balance.

As part of the overhaul, lawmakers outlined a plan to institute a “Homeowner’s Bill Of Rights” that would “allow for flexibility in the debt to income ratio; end the requirement that homeowners be delinquent in order to be eligible for a loan modification; end dual tracking; and require that servicers not report adverse credit information while trial or permanent modification is underway.”

Comments

One Comment

  1. Ron says:

    Since this is being pushed by the California Democrats, you KNOW that it will ONLY be AVAILABLE to ” ILLEGALS” !!!!

  2. Duh! says:

    So what are they going to do for those of us who were not stupid enough to get in over our heads? We’re not in mortgage trouble. Do we get free money too?

    1. Ron says:

      Not unless YOU are an ILLEGAL !!

      1. David Beaubien says:

        Your comment is not worth a serious reply.

  3. David Beaubien says:

    I support their effort.
    When will State Attorney General stop the banks from foreclosing on California real estate. She is in possession of the results of four federal investigations which found the banks had violated state and federal law when foreclosing on California properties. She subsequently announced her own investigation, has reportedly accepted funds from Bank of America, and has taken the client files from the attorney M. Stein who has been leading the fight on behalf of homeowners against the Banks that had violated state and federal laws. How is she helping the homeowners, and protecting homeowners against violations of law committed by the banks?

  4. bounce says:

    >> The letter urges the Obama administration to assist “struggling homeowners who were at the mercy of mortgage servicers” by taking advantage of historically low interest rates.

    Wait — these poor people were forced to buy homes by the lenders?

    They agreed to adjustable loan terms they could barely afford and gambled that they would never go up, and now they are asking for the taxpayer to bail them out.

    1. David Beaubien says:

      What about the persons who were qualified (combined verified household income of over 250,000 (fed tax returns) did refinance (mortgage interest tax deductible), then the market fell, the home which had been worth over one million were now worth less than they paid for home (under 600,000). One of the couple was laid off (teacher, film producer), could not get loan modification due to low value of real estate. Bank would not refinance, because they claimed they sold mortgage to investor. They needed help from bank. They were caught between less income, and falling value of real estate.

      1. Duh! says:

        And how is this the tax-payer’s responsibility to fix?

        Like Bounce said, they purchased the home. They gambled that no one would get laid off, that home prices would stay abnormally high (actually outrageously high – so much so that I knew not to buy at those prices based on dollars per square foot), and that their adjustable rate mortgage would not adjust up.

      2. David Beaubien says:

        Hello Duh? and Bounce?
        I suggest you both get more information. First view the film-Insiide Job, and then Loose Change. If you both have any intelligence you will change your opinion about who is to “blame” for the mess. As these films will prove, there is sufficient evidence pointing to those repsonsible. It was not the fault of those who refinanced there homes to pay off debts whose interest was not tax deductible but choose mortgage interest to shelter their income. The loss of equity, the drop in the value of their home was not their error, or their stupidity.
        Maybe you renters, and home owners who do not mind loosing the equity in your homes can feel comfortable with the rest of the1%. The 99% will just have to suffer the consequences of actions and decisions theywere not a part of, just the victims. Too bad for them though, they can take it. Doesn’t matter what they lost or how it happened. Just tough luck.
        When the Banks are the criminals, who protects the public?
        Ask the California State Attorney General when she is going to do something more than form a task force that has not acted. Ask why she accepted money from Bank of America? What has she done to earn it. What did the Bank get in exchange?

  5. Wain says:

    Some borrowers were duped into accepting teaser terms, it pertains to an initial payment which does not include an interest rate and starts as a negative amortization, when such loan matures to include interest. the payment will devastate peoples finances. lots of unscrupulous lenders originated such loans without disclosing the terms and or consequences. the only fault on the side of the borrower, being ignorant. Then again consumers are ignorant. therefore dependant upon the honesty of the professional.

  6. vivian gowdy says:

    everyone should be able to count on around 5% yr increase historical ysince
    1940″s Most underwater folks lost all of that plus more. I am paying for a house that is 60,000.00 underwater. If you need to move you are stuck. It is not right.

    1. David Beaubien says:

      All homeowerners whose property has been foreclosed should get the ir property back. The banks should make the following deal.
      Of the total property indebtedness, make one note interest bearing 2%, 40 year amortization, first five years interest only. The note should not exceed 100% of the current market value of the property. The balance (indebtedness less 100% of current market value) becomes a 2nd note secured by the real estate. 2nd note iis non interest bearing, no payments required. After five years, when and if the property is sold, both notes become due and payable from sale proceeds. Any amount unpaid at time of sale, is written off by the bank, with no debtforgivess taxable income to the homeowner. This is the best deal for the homeowner. The banks should absorb any loss due thier manipulation of the market value of properties, violation of laws processing foreclaosure, and manipulation of the ratings on the securities backed by the mortgages sold to investors, and collection of multiple insurance claims on same defaulted mortgage.

  7. BARBIE says:

    I paid 189900 and my home is now worth 68000. I have a HUD home that I had to qualify for, have good credit and put money down. Did it all right and am not behind in my mortgage. No help for me!!! I was not one of those who just bought a palace with welfare income. I was not one of those who took major loans out of their equity. No help for me because I did it right in 2004. Now I’m stuck with no help from anyone.

    1. David Beaubien says:

      BARBIE. YOU GET THE SAME DEAL DESCRIBED ABOVE BECAUSE YOUR LOAN IS HIGHER THAN THE VALUE OF YOUR PROPERTY.
      !st mortgage note not to exceed 100 of the current market value of your home.
      2nd mortgage note represents the difference between the new 1st mortgage and the debt against the property. At no interest, and no payments required. When the value of your property rises, you can sell the property. The sales price less first TD and 2nd TD may not be fully paid. The amount unpaid is the banks loss, with no debt forgiveness liability for you. The banks are responsible for the great drop in the value of your property. They should bear the loss.

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