12/06/2007 GAAS:942:07 FOR IMMEDIATE RELEASE Print Version |
Governor Schwarzenegger Issues Statement on President Bush’s Announcement of Mortgage Plan
Governor Schwarzenegger today issued the following statement regarding President George W. Bush’s announcement of a mortgage plan:
"I applaud President Bush for announcing this nationwide arrangement with subprime lenders. The President is right that the housing market downturn is the biggest threat to our economy and that homes in foreclosure pose costs for entire neighborhoods and communities. As a result, avoiding preventable foreclosures is very much in the interest of all Americans.
"As with our November announcement of a similar agreement, these streamlined arrangements are needed to address a very large number of similarly-structured subprime loans resetting over the next 12 to 18 months. But that category of loans is just one portion of the overall mortgage problem facing the country. One of the benefits of the streamlined approach announced today is that it frees up lenders to deal with more of the case-by-case loans that do not fit into the streamlined category. In those cases, borrowers and lenders need to aggressively reach out to each other and work hard to keep borrowers in their homes.
"In addition, Congress and other legislative bodies must be sure not to engage in actions which make the problem worse or endanger the ability of current and prospective homeowners to get the capital they need to refinance or purchase homes. Mistakes were made by both sides and it will be in no one's interests for legislators to engage in actions which could choke off legitimate credit extension."
Last month, Governor Schwarzenegger worked with loan servicers from Countrywide, GMAC, Litton and HomEq to agree to streamline "fast-track" procedures to help keep more subprime borrowers in their homes. Together these four enterprises service more than 25 percent of issued subprime mortgage loans. The agreement the Governor negotiated with lenders builds off a proposal put forward by Federal Deposit Insurance Corporation Chair Sheila Bair that encourages lending agencies to keep subprime mortgage borrowers at their initial interest rate if they are living in their home, making timely payments, but can't afford the loan "re-set"--or jump to a higher rate.
The Governor also has launched a public awareness campaign to educate homeowners about options that can help them avoid losing their homes to foreclosure. The $1.2 million campaign - funded through existing consumer education efforts within the Business, Transportation and Housing Agency and the State and Consumer Services Agency - will: inform borrowers about their options, urge borrowers to work with lenders before foreclosure, encourage the use of nonprofit housing counselors and partner with local leaders and trusted organizations, like churches and community groups, to spread the message.
This year, Governor Schwarzenegger signed legislation to increase protections for Californians who own or plan to purchase homes and to expand affordable housing opportunities. The Governor has also pledged to work with lawmakers in the coming year to take additional steps to protect homebuyers.
Earlier this year, the Governor directed his Cabinet to form the Interdepartmental Task Force on Non-Traditional Mortgages. California was one of the first states in the nation to form a task force to examine the alarming developments in the non-traditional mortgage market. The task force consists of leadership from two agencies and seven departments responsible for all aspects of this complex issue.
In September, the Governor made $1.16 million in Community Development Block Grant funds available to counties for consumer counseling and urged Congress to provide more funding for these programs in California.
