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.”


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