Housing and Foreclosures

The foreclosure crisis and economic downturn have had a devastating impact on American families.  Because of shoddy business practices and enormous risks taken by big banks, our housing and financial systems have collapsed.  And in the wake of this destruction, millions of Americans have lost their jobs, their homes, and their overall quality of life.

Given the scope of the problem, government foreclosure relief programs alone just aren’t enough.  We must do more to fix this - more to fix the housing market and more to create jobs.  Putting people back to work will do more to right our economy, help people pay their mortgages and get the banks lending again.

My priorities include:

Real Solutions to Address Our Housing Crisis.
Funding the Housing Counseling Assistance Program.

Real Solutions to Address Our Housing Crisis
California has earned the unfortunate distinction of having the highest foreclosure rate in the country. A study by RealtyTrac showed that in one month alone, one in every 325 households in California had a foreclosure filing—more than twice the national average.  That’s why I, along with my California colleagues, put forth a plan to address the needs of California homeowners ensnared in the foreclose crisis.  It includes:

• Refinance Fannie Mae and Freddie Mac Mortgages at Low Rates.  The plan calls for Fannie Mae and Freddie Mac to allow their mortgages that meet basic criteria to refinance at a historically low market rate.  This provision would allow homeowners to reduce their monthly mortgage payments by hundreds of dollars, which would go a long way in reducing the number of defaults and preventing foreclosures.

• “Homeowner’s Bill of Rights.” The plan calls for a Homeowners' Bill of Rights to apply to all federal housing programs that will:

* Make the process homeowner-friendly: Ensure a single point of contact; require servicers to review documents in a timely fashion and disclose information; and ban “advanced fees.”

* Eliminate needless obstacles to effective modifications: 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 a trial or permanent modification is underway.

* Ensure accountability and establish an appeals process: Create an Office of Consumer Advocate; conduct random audits of modifications; and establish an independent appeals process for homeowners who believe their modification has been improperly rejected or handled in violation of program rules.

• Temporary Reductions in Interest Rates for Those in Bankruptcy Proceedings. Homeowners who file for Chapter 13 bankruptcy would see a temporary reduction in their interest rate.  This would mean the full amount of a homeowner's monthly payments would be directed to paying down their principal balances for five years.  Coordination with the bankruptcy process would make these reductions more likely to succeed than other types of loan modifications while also limiting the program to those who truly need it.

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Funding the Housing Counseling Assistance Program
It’s crucial that we maintain focus on the ongoing foreclosure crisis, improve language access for critical services, continue to press for sensible loan modifications and hold mortgage servicers accountable. The Housing and Urban Development’s (HUD) Housing Counseling Program addresses these concerns and I have continuously pushed for full funding of this program because it:

• Provides Direct Support for a Variety of Critical Services.  The HUD Housing Counseling Program is the only federal program that provides direct support for pre-purchase counseling and education for first-time homebuyers; renter counseling, including for families transitioning out of homeownership; and reverse mortgage counseling for senior homeowners.  The program also provides support for post-purchase counseling and education for homeowners, and counseling for homeless individuals and families seeking shelter or transitional housing.

• Funds the Work of Non-Profit Housing Counselors Helping Americans With Basic Housing Needs.  The Housing Counseling Program enables counselors to educate, advise and assist families in determining whether homeownership is the best course of action for them.  Counselors also help first-time and struggling homeowners fill out and submit complex financial forms, and serve as advocates for homeowners, shielding them against widely documented abuses, like loan modification scams.  They are a vitally important resource for helping Americans achieve the American dream of purchasing and maintaining safe and affordable housing.

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