Governor Schwarzenegger Signs Legislation to Help Protect Homeowners from Foreclosure

GILDA GONZALES: Well, good morning, everyone. My name is Gilda Gonzales, I'm the chief executive officer of the Unity Council and it is quite our honor to be hosting this signing ceremony. The Unity Council has been at the forefront of foreclosure prevention and counseling, so we really appreciate any assistance that the state is going to give us, because we have seen the devastation at the community level. So I'm going to, before I introduce the Governor, I'd like to acknowledge some of our other dignitaries here with us; Assembly Member Sandre Swanson from Oakland, Assembly Member Guy Houston from San Ramon. We also have Secretary Rosario Marín, State and Consumer Services Agency, also Oakland City Council member Jean Quan. Also visiting with us today is Art Pulaski, executive secretary-treasurer AFL-CIO, Norma Garcia from Consumers Union, Ron Coleman, ACORN and Preston DuFauchard, commissioner, Department of Corporations. Thank you, everybody, for being here and I'd like to introduce the Governor.

GOVERNOR SCHWARZENEGGER: Thank you very much, Gilda, for your nice introduction. I also would like to thank Senator Perata for being here and for his great work and Mayor Dellums, Secretary Marín and Commissioner DuFauchard and Art Pulaski from the AFL-CIO and, of course, Assemblyman Houston and Assemblyman Swanson and all the other dignitaries and important people that are up here that all helped to make this possible.

Losing a home to foreclosure is a financial and also an emotional crash that takes sometimes years to overcome. Foreclosure not only devastates families but it hurts neighborhoods and it depresses our economy and our budget and we lose a lot of jobs, of course. In California we are feeling all of those things already because of this crisis. Half a million Californians have subprime loans that will jump to higher rates over the next two years and those people need help.

So today I'm proud to sign SB 1137, which requires lenders to contact their homeowners and explore restructuring options before initiating the foreclosure process.

I want to remind homeowners, of course, that they have also a responsibility. Don't run away when someone reaches out to you. When someone calls you, answer the phone. If they write you a letter go and respond, because lenders want to avoid foreclosure just as much as you do, so there's a great opportunity. Take advantage of that opportunity.

This bill also provides renters of foreclosed properties additional notice to move and requires foreclosed properties to be adequately maintained by the lenders.

I want to commend Senate President pro Tem Perata for his great work and for reaching out to Democrats and Republicans, consumer groups and industry groups to draft this pragmatic approach. So congratulations, Senator, for the great work that you have done.

We know that many factors contribute to the mortgage crisis, so there is no really single solution, but this bipartisan legislation gives struggling homeowners one more tool. And it builds upon a series of actions that my administration has taken since last year. We urged, for instance, President Bush and Congress to raise the federal loan limit, which they did. But now we have to do everything that we can to make sure that the increase stays permanent. We reached a voluntary agreement with major lenders to freeze interest rates for eligible at-risk homeowners and we launched a $1.2 million campaign to educate people about options to avoid foreclosure, which includes a toll-free number, 888-995-HOPE.

While we are doing everything we can to help thousands of people here in California stay in their homes without government subsidies, so I'm confident that with this SB 1137, which I will be signing very soon, we will help even more Californians to realize and keep the American Dream alive, because owning a home is part of the American Dream. So thank you very much, again.

And now I would like to bring out the man that is really responsible for this bill and that has done such an extraordinary job. I'm talking about Senator Perata. Please. (Applause)

SENATOR PERATA: I'm actually feeling really good today. I had the 11 o'clock arrival time in the pool. And we always bet what time the Governor is going to get there and I had 11 o'clock today, so I won. So, I'm feeling pretty good.

I want to acknowledge somebody immediately. Ms. Hicks was the one that gave us her home, or the front of her home, in East Oakland when we kicked this off -- a year ago? About a year ago -- and she spoke clearly and from her heart and from the reality that had befallen her and made it very clear what the problem was in California and what the problem was in this community.

And so we really drafted, after that, the legislation that we could do in California. A lot of people wanted us to do everything and most of it is pre-empted by federal law. So we decided what we needed to do and what we needed to do was to make sure that people who were being foreclosed upon had a shot at talking to the people who hold the note. And you've probably all heard by now that the real problem is these loans get packaged, they get sold, they get repackaged, they get sold again. And so if you went into Thrifty Loan Company and got your mortgage, somebody completely different was holding it.

So what we wanted to do -- because they said we can never talk to anybody, the first time we knew we were in trouble we got it in the mail saying we're being foreclosed upon -- this allows for a conversation, it requires a conversation between the two parties of interest. And hopefully they can work something out. As the Governor said, lending institutions are not interested in having a lot of foreclosed properties on the books. So this, we believe, is a major step forward. There will be a work-out opportunity and some who would be foreclosed upon, thrown out of their homes, will be able to stay.

The second one was for tenants. Unsuspectingly, people rent a home, didn't realize that somebody bought 10 pieces of property on speculation, walked away from all of them and they end up getting thrown out of the home. And so this doubles the amount of time that a person has before they're evicted, from 30 to 60 days.

Now, taken in context of what's happening in California and the country with the subprime market, these are very small steps. But if you are the one who is facing the problem, this is what people said was the most important thing. Let me talk to somebody. We originally wanted to have a face-to-face, but we realized that we'd have to fly people to Ottawa or to India. A phone call turned out to be a lot easier and a lot more practical.

This problem has shattered California's economy. I mean, if you go in East Oakland, North Oakland, the Central Valley, Inland Empire, there are hundreds of thousands of foreclosures in this state. And when the President said finally that he thought we might be in a recession, we'd already figured that out here. We got hit hard and we're still getting hit.

So this is a step in the right direction and I want to thank the industry, because if they would have dug in and said hell no, there's no way we're going with you, we wouldn't have gotten it done. We could have made a lot of nice speeches, but there would be no practical affect. So they worked with us, they worked with us hard. And we also had bipartisan support. Republicans realized, the same way we did, that this was not a Republican/Democrat partisan issue. This was affecting a lot of people in many places that you wouldn't expect.

Every once in a while the numbers come up right and we get something in our teeth and we run with it and we did this. And in the final analysis, the most important thing is getting the signature on the bill. I brought three of them, so I'm bound to get one of them. And you know, we had to have the Governor's support and his administration was working very closely with us step by step as well.

So I want to thank everybody for making this possible; Ms. Hicks for inspiring all of us to get what needed to be done, done; the Consumers Union and ACORN, of course -- their voices were many and loud. They held a lot of meetings throughout the state in communities that were hit hard and they had an opportunity, people had an opportunity to come and talk to us specifically about their problems. So, in addition to the legislation, there must have been tens of thousands of hours of staff work, serving constituents that went into this effort. So all in all, a pretty good day. Thank you.

I'm going to introduce the mayor now. Mayor Dellums has had an abiding interest in these issues when he and I were kids and we go way back. There is not a social issue that this man has not had his hands on, or his arms around. And he's being very modest, saying that we did it, he didn't. Having leadership, having the stature of this man with us means a lot and I want to thank him for being here. (Applause)

MAYOR DELLUMS: To my distinguished colleagues, first the Governor and Senator Perata, have very articulately laid out the provisions of Senate Bill 1137, so I will make no effort to be redundant. Let me just take the opportunity first to thank you, Governor, for your continued leadership and your continued support of many of the ideas that we have advocated to confront the myriad problems that we have to deal with on a daily basis in Oakland. Thank you very much. Each time we've reached out to you, you've been there for us.

Number two, I'd like to thank Senator Perata for your continued diligence and your leadership in making sure that this bill passed on an urgent basis. That speaks to your dedication, it speaks to your leadership and again I thank you.

To Sandre Swanson and other members of the Bay Area delegation, I'd like to just say in this public forum, thank you individually and thank you collectively for your progressive leadership in attempting to address the myriad problems that confront us here in the Bay Area on a day-in and day-out basis. You've always been there.

Ms. Hicks, I'd like to just say to you and to ACORN, thank you for all of your diligent work, because when the record of this moment is written, it will not be complete unless it lays out, very clearly and unequivocally, that you played a very vital and significant role in moving this legislation forward. And I think the Governor and Senator Perata have spoken eloquently to that, I just underscore for emphasis the role that you played.

To all of my other colleagues here who played a role in this, thank you. This is a significant moment. As Senator Perata pointed out, this is one tool. It's not the only tool, but it's in the aggregate, it's in the collaboration, it's in the coming together with all of the various tools that we can bring together, that we can ultimately resolve these problems. We know that California has been disproportionately hit by the problems of this mortgage crisis. Oakland has also been particularly hit. In Stockton, for example, one out of every 75 homes have been foreclosed. These are amazing statistics. And so here is another tool, it's an important tool and I thank everyone for being here.

Finally, I'd just like to say that we here in Oakland continue to do our part. This legislation and state efforts notwithstanding, we've been working using Community Development Block Grant funds to work with non-profit organizations, the Unity Council, First California Bank and ACORN, to continue to provide a myriad of services to people who are borrowers and people who are also tenants, who are being adversely affected by this and communities who have to bear the scars of homes being walked away from that ultimately become eyesores and problems in the community. This legislation is an effort to address that, so I thank everyone for being here. This is a significant day and this is an important time for us to move forward.

You're sure he would? It's my pleasure to introduce Art Pulaski, who is the secretary-treasurer of AFL-CIO and I would yield to him for whatever remarks he deems appropriate at this point.

ART PULASKI: I'll be very brief. Art Pulaski, California Labor Federation. I want to acknowledge ACORN also and Sharon Cornu, the head of the labor movement here in Alameda. I want to thank Senator Perata for championing this bill and the leadership of the Governor for signing it.

Simply this: Working people are the ones suffering from these subprime loans. For working people, their home is their most important asset, their most important investment and now it's slipping away, with tens of thousands more people yet to be hit by this crisis in this freefall of foreclosures.

This bill is important and we're proud the labor movement supports it, because it gives people, as your home is slipping away, it gives people a handhold to grab. So when that lender calls you to say that we're about to foreclose, use that as an opportunity to renegotiate your loan. It's in the interest of both the individual and your lender.

So I want to thank again the senator for championing and the Governor for signing. Thank you very much. (Applause)

GOVERNOR SCHWARZENEGGER: Thank you. Now we'll do the bill signing.

(BILL SIGNING) (Applause)

QUESTIONS/ANSWERS:

GOVERNOR:                         Are there any questions about this? We have the Senator here -- if you would come over, please? -- whose bill this is. If there are any questions about that or about anything else, please feel free.

QUESTION:                           Senator Perata, Julie Small, KPPC. You said that a lot of what the state would have liked to do is pre-empted by federal law. What are you hoping to see from the federal government to help future homeowners not get into this situation and to help people currently in this crisis?

SENATOR PERATA:             Anything. They've been having a long, long protracted discussion. What I hope they don't do is overreact. A lot of times you try to kill a fly with a Howitzer rather than applying what needs to be done. I assume and I hope they're listening to people like Ms. Hicks and ACORN and those who are most affected by it, because what you want to do is something that is going to solve the problem.

And a lot of times what we do is overreact and we end up solving a problem that doesn't exist and creating one in the future. But any action right now would be greatly appreciated.

QUESTION:                           (Inaudible) foreclosure problems is cash, which this provides none. It provides fines for people who don't take care of their property, some of which you can't even fine. Ultimately, it doesn't really seem to do much other than delay the process, which seems to be inevitable. What can you do about the inevitable process? Because, as one of the people up there said, hundreds of thousands of homes are at risk.

GOVERNOR:                         First of all, let me just say I think that the agreements that we have made with the lenders and with this bill helps a lot of homeowners and I think this is very important. What we are trying to do is to keep as many homeowners in their homes and especially in difficult times like that and I think that there are opportunities for the homeowners, there are opportunities here for the lenders. I think what we want to do is for them to get together.

It is, of course, very difficult, as the Senator has explained earlier, because those mortgages have been passed on and sold and sold to another party and to another party, so that many times we don't even know who they are and they have not sent out notification to the homeowners that they are the new owners of the mortgage and so on.

So I think that all of this will be straightened out and I think this will really help so people can stay in their homes. Because I think what we need to do is just look at the next two or three years. After that, I think it will be easier, because as long as you don't have those increases in interest rates and as long as you can stay long enough in there so that your home, the value of your home comes back again, I think that's what we're waiting for. So I think that you should know, this is tremendous help to the people of California. Each person, each family we can keep in their home, is a great success for us.

MAYOR DELLUMS:             First of all, I underscore everything that my two colleagues have said. I would just add one additional thing that I think can be the responsibility of the federal government and that is to put money forward to provide for bridge loans. If Oakland, for example, had $25 or $30 million, we could provide a number of bridge loans to people that would allow them to stay in their homes. So to speak specifically to your point about cash, that's one way to get cash. And the federal government at this point is the level of government with deep pockets and if they would be willing to appropriate a significant amount of money that would allow local communities to access those dollars to develop bridge loans for people, that would be an additional arsenal and I think that that's important.

But let's not detract from what is in this particular piece of legislation, because the things that this legislation is attempting to do are significant and extraordinarily important and have a significance unto themselves.

SENATOR PERATA:             If I felt that way, I couldn't get up in the morning. I know what you're feeling, it is an overwhelming problem. But what makes a difference is someone like Ms. Hicks. You know, this will help individuals and the only way we can ever get our arms around anything is trying to look at helping a few. That, hopefully, will begin to help many. But you know, particularly these days, what's going on in the world today -- the Mayor and I were talking about it -- there's a major shift going on in the world today in the financial markets, in the cultural and social markets and in the political markets. And it's very difficult to think that anything one individual does is going to matter that much. But when you see people who have been there, said this has been my problem and now you're giving me a solution to it, it's good enough for today.

QUESTION:                           (Inaudible) the few and not the many, but the many is what fixes the economy. Otherwise what you do is a bunch of foreclosed properties --

SENATOR PERATA:             Oh, you're thinking you're talking to a presidential candidate now.

QUESTION:                           -- a lot of money. The people with a lot of money, investors are going to come and buy these things for a song (Inaudible)

SENATOR PERATA:             Well, I'll tell you, the only thing we can do in this state -- and you know, we're grappling with a sizable deficit ourselves and we have to come to grips with that -- look people in the eye and say if you want to get out of this, here's how we're going to get out of it. We're all going to have to pull together and make some sacrifices. You just have to be determined to discipline yourself to do the things you have control over and then have some faith that it will catch on, or that other people in other places are doing the same thing.

COUNCIL MEMBER:           I have to say that if you have a blighted house next to you -- I'm a Council member -- if you have a blighted house next to you, it takes down the whole neighborhood. So it's not a little thing that these landlords -- I've had to call Germany and people across international lines to make them take care of their abandoned property so it doesn't turn into a drug house. It's not a small thing. And that can pull down the economy of an entire block and an entire neighborhood.

QUESTION:                           Governor, there's other legislation pending and Senator Perata has deemed this to a first step. Do you have any comment on the other legislation and the growing need of the problem, which changes kind of like those fires change, it goes in different directions?

GOVERNOR:                         Well, I think that -- and as you know, I never comment on any of those things until I see it myself and so I think we will deal with it as they come down. But I think this was one of the best that I know of and I'm aware of in the Capitol and this is why we immediately got together and started working together on this and had this bill signing here in front of everyone, because I think this will help a lot of people.

Okay, thanks very much. Thank you.