Governor Launches Public Awareness Campaign to Help Homeowners Avoid Foreclosure

GOVERNOR: Good morning, everybody. First of all, I want to thank Rose Mayes for hosting this here. She has been extraordinary, and has had some great ideas in this meeting, so I want to thank you very much for your great service. I appreciate it, and I can't wait for you to work for us and for the State.

MS. MAYES: All right.

GOVERNOR: Okay, good. I also want to thank -- she, of course, everyone knows she is the Executive Director of the Fair Housing Council of Riverside County. And then we have also here Supervisor Buster, I want to thank him also for being here, and Supervisor Gonzales. She is, of course, full of energy.

SUPERVISOR GONZALES: Always.

GOVERNOR: Always, exactly. I love that. And then we have Preston DuFauchard here, who was one of our great head negotiators with our lending institutions. And he is, of course, the Commissioner of Corporations. I really appreciate his hard work also.

First of all, I want to thank everyone for coming here today. Today I'm announcing a 1.2 million dollar Awareness and Outreach Campaign in order to educate the homeowners, to let them know the different options and choices that they have in order to avoid losing their homes through foreclosure.

Last week we all celebrated Thanksgiving, and we were sitting around the tables and eating, having a good time, spending time with our families and our friends, and giving thanks. And at the same time, I couldn't avoid thinking about the people that are struggling with their homes, and living in fear of foreclosure of their homes. And they did not celebrate, and they did not enjoy Thanksgiving. I think there are half a million Californians right now that have sub-prime loans that will jump to higher rates within the next two years, and I know that many of them are in danger of losing their homes.

This is a big concern right here in the Inland Empire. A recent report said that 1 in every 43 households in Riverside and in San Bernardino County have foreclosure filings. So I want to make sure that we all work together on this, and we want to make sure that next Thanksgiving those people don't have to live in fear anymore, and they all can celebrate as everyone else does.

And we have, of course, an Awareness Campaign that we are announcing here today, that first of all informs the borrowers about their options, urges borrowers to work with the lenders before foreclosure, encourages the use of non-profit housing counselors, and partners with local leaders and trusted organizations like churches and community groups to spread the message. We also are directing the California Department of Veterans Affairs to explore steps that we could take with the Cal-Vet Home Loan Program to help qualified veterans and active duty personnel to refinance sub-prime loans into safer and fixed-rate loans.

Now, this is a campaign that is an extremely important step in helping avoid foreclosure. This is what this is all about. And the only way we can do it is by all of working together, the State to coordinate with the local leaders and with everyone. We hope to prevent more than 100,000 California families from losing their homes. Our message is that lenders are willing to work with you, to work with the borrowers in order to find a solution. There are four of the lenders that were willing to sign a written document, an agreement, which they did last week, in order to show their willingness to work with the borrowers. They represent 25 percent of all the lenders, and we are now working on making all of them come to the table and sign this agreement.

But right now we are seeing homeowners who are afraid to reach out to the lenders, and we want to let them know that the fact is that there are so many of the people who have lost their homes never really, the lenders could not reach them at all, and that is a big problem. I think that it is important for the lenders and the borrowers to work together on this problem. It took a two-way street to get into this mess, and now it takes a two-way street to get out of this mess. So we want to ask the borrowers, if the lenders call, answer the phone. If you get a letter, respond to that letter. Seek out a solution now before it is too late.

Everyone agrees that borrowers and lenders have made mistakes here; they both should have been more prudent. But we also know that foreclosure is not good for anyone. As a matter of fact, right now in this meeting that we just had here, we talked about that it is not just that you lose your home; it is bad for the neighbor, it is bad for the whole neighborhood, it is bad for the economy, it's bad for state revenues, it's bad for the job market. On all of those things it has an affect, and so therefore we all have to work together on this. We want to see borrowers and lenders working together in order to avoid many of those foreclosures, as many as possible.

And I want to thank again everyone here today that has worked so diligently on this problem, and worked together with us. And like I said, that the State cannot do all of this by ourselves. We need the locals to work together, because that's where the action is, in on the grassroots level, so I want to thank you very much again.

And now Rose, if you'll come up and say a few words, please?

MS. MAYES: Again, I would like to thank everyone for coming. I never thought that when I went before Mayor Loveridge, the City of Riverside City Council, nor the County Board of Supervisors, that it would end up here. But I knew that we had a problem here in our state, and in our county, and in our city. We started off with 5 calls over a week. Then next, 50 calls. Then it got to 100. Well, I knew that we had to do something.

I want to thank all of my partners who worked with us to call together a Foreclosure Conference on September the 22nd where, on a Saturday morning, raining, that we had 425 residents come to a meeting, a workshop, to address the foreclosure issue here in the County of Riverside. We know that we all are guilty in this, because we didn't know exactly what the end would be two years later, with the type of loans that were being issued out to our residents here in Riverside County, the Inland Empire, both in San Bernardino and Riverside. But we know now that we are taking steps to change whatever action that we took some two years ago, because we are going to work together, we're going to make sure that the information is out there for our residents, our clients. We're going to make sure that we work through these issues with the lenders, with bankers, with real estate agencies, with mortgage companies, with home loan counseling centers, Springboard, neighborhood services, neighborhood works.

We're here to help those residents who really, really need help, and we are going to assure you that we're not just going to stand idly by and be called the No. 1 in the nation in high foreclosure rates. What we are going to do, we are going to close that gap, we are going to be the No. 1 who actually closed the foreclosure gap in the nation. We want to be the first one on the map.

I want to thank each and every one of you who have supported us, because one of the things that we know, we cannot do it alone. We are going to need your help, working together to make this foreclosure crisis go away. We are going to eliminate it. Thank you so very much. Governor, you have been a force of hope for us here in the Inland Empire, and we appreciate everything that you can do, working together with us, to make this a reality.

GOVERNOR: Thank you. And now I would like to have Supervisor Bob Buster come up here and say a few words, please.

SUPERVISOR BUSTER: Certainly having Governor Schwarzenegger shine a spotlight on this issue here in Riverside/San Bernardino counties, which is probably one of the centers across the nation of this terrible problem, is really helpful, Governor. We really appreciate the State's resources being brought to bear on this. And Riverside County has already sent out in all the property tax bills this Points of Information, accurate and sound information, to homeowners who are facing foreclosure, have questions. But having the State now get into contact with major private lenders and asking for relief -- they're asking for these work-outs to take place, asking for the homeowners to be given a chance to work things out. That really ups the ante here, that really adds another terrific tool here that we were lacking here in this local area. And there are more -- as you all know -- there are millions more of these mortgages that are going to adjust next year. So it's none too soon, but I think we now have the hope that we can prevent a lot of people losing their homes. And as everyone pointed out, we all lose when people lose their homes. So thanks again, Governor, and we look forward to working with you in the year ahead.

GOVERNOR: Thank you. I have Supervisor Josie Gonzales to say a few words, please.

SUPERVISOR GONZALES: Thank you, Governor. Thank you very much. I'd like to say that the relationship that the cities, the county, and the state has, is more like a three-way marriage. It's in the good times and in the bad times. And it's when we come together to work for a solution to find a way to continue to deliver the American Dream, and that is owning your own home and being able to retire and one day enjoy the fruits of those labors, is what this today is all about. We must continue to work together.

In the unincorporated areas of both San Bernardino County and Riverside County, we have a great deal of residents who have no one else but county government. They have long been in a holding pattern, waiting for the economic wave to come in and spill over from the cities into the unincorporated areas. We thought that with what was taking place, the great economic momentum, that this was the time. And people have begun to extend themselves in the process of building that dream called home ownership.

Today is an example of how we come together in a multi-hinged approach, because the problem is multi-hinged. When one hinge fails, there is a repercussion, a ripple that goes back into the echelons of something we call money that moves this great country of ours, let alone this state. So I tell you, there is hope. When you see government working together, it is something that benefits the people. And I ask the people to reach out. Don't be foolish, don't be afraid, don't hide. The opportunity to receive help is here, and it's in the form of our Governor. Thank you.

GOVERNOR: Thank you very much. Thank you. I would also like to have -- even though he's not listed as one of the speakers, but I think it's very important to hear from the man, from Preston DuFauchard, who had actually negotiated with the lending organizations. And as I said earlier, the federal government has talked about all this, but we actually have created action, went out there and made an effort, and now we are working very hard on getting all the lending corporations to come on board and to sign this agreement. If you would just say a few words about the negotiations?

COMMISSIONER DUFAUCHARD: Absolutely. Thank you, Governor. What we've done is, we've brought together a number of lenders and services for sub-prime loans, and got them to commit to a set of principles. They're really simple.

One is to reach out proactively to borrowers well before the loans reset -- and we're talking about the 327s and the 228s that are about to reset in substantial volume over the next 18 to 24 months here in California, but throughout the country as well. To reach out -- you know, 90 days, 120 days, 6 months, to reach out to borrowers to let them know about the resets.

To streamline the processes by which the lenders determine whether the borrowers will be able to make the reset payments.

And then the third point, which is for the borrowers who cannot make the reset payments, to keep them at the starter rate for a sustainable period of time so that the payments to the lenders get stabilized, the borrowers are able to stay in their homes at the rate that they have been paying. This is for borrowers who are in their homes and who are current, and I think it's important.

And part of what the Governor has announced today really is important because it is an effort to remove threats that borrowers may feel when they're contacted by their lenders, and communicate with their lenders. So this is an important and comprehensive effort that we're undertaking.

GOVERNOR: Thank you very much. And Assemblyman Benoit, if you just maybe want to say a few words? Because I know this has been a problem that has been bothering you for a lot of -- a few months that we have been talking about it.

ASSEMBLYMAN BENOIT: Thank you, Governor, for being here, and representing the legislators and the constituents in this area. We appreciate you taking the time in the Inland Empire to start this campaign, because we are the most seriously impacted, because we have the largest growth. We have had seminars here before. We have had some help with the state level before. Rose has done some great seminars here. But nothing will bring the attention that you can to the fact that there alternatives for people who are about to lose their home.

So I thank you, and commit to working with you. We heard some great potential ideas in our previous meeting from several of the mayors that may require legislation; I'd be happy to work with you and the mayors on those issues. And again, thanks for being here.

GOVERNOR: Absolutely. Thank you very much. Thank you. If there are any questions, please feel free. Yes, please.

Q: Will lenders have to come on for this to be successful, other lenders?

GOVERNOR: I think it is very important, as I said earlier, that because it's a two-way street that got us into this mess, that it's a two-way street out of this mess. So therefore borrowers and lenders have to work together. I think if both of them make an effort, and if the local officials all make an effort -- as I said earlier, it's a grassroots operation. We are here today to put the spotlight on it, but we need the media to go out and reach out to the people and let them know there is help on the way, and that they should all work together, the lenders and the borrowers should work together. I think that with all the locals getting that campaign going, I think that we can reach all the homeowners and let them know; work with us, and we can save a lot of homes.

Q: Governor do you know what -- is something holding up the other lenders from joining this whole thing?

GOVERNOR: No. I think it is -- just imagine, like legislators, that something -- that maybe Assemblyman Benoit has an idea. Now it takes him time to convince all the others in the Legislature to think the same way he does. So it is not something that he just announces it, and then everyone says, "Oh, I'm with you." He has to work them over, he has to go and talk to them, he has to negotiate and all of those things. He has to show to them why that is important, to go in his direction. And that's all what leadership is about.

And this is the same here. There were four of them that came forward right away, and we were very happy about that. And I think that we see already movement, that there will be others joining them. And the more often that I am going to go out there and put the spotlight on it and ask them to come in and to help in this situation, I think the more confidence the people will have down the line when it comes to lenders. And so I think if everyone works together we can get out of this crisis.

And like I said, it's our responsibility on the State level to coordinate that and to go around to the different communities all over the state of California, because for us what is important is that we were elected to make the lives of people better. It doesn't matter if it's a Democrat or a Republican; all of this has nothing to do with partisanship at all. It has to do with just helping people to -- you know, owning a home is so much of the American Dream, and we want to make sure that the American Dream doesn't turn into the American Nightmare. This is what this is about.

Q: Governor Schwarzenegger, I've done a lot of stories on people who are losing their houses, and they've contacted their lender, they've tried to do everything right. And they've asked that specific question; can we hold the rate at what I'm paying now? Consistently, the lenders have all turned them down. Is this going to change with this new initiative?

GOVERNOR: This will change, because the four have already agreed that they will keep the rate down until the equity goes up again, and if the housing prices go up again, and when people, let's say five years from now, can make the higher payments. But right now they will keep it down at its original rate.

Q: What will be the threshold for that decision?

GOVERNOR: Well, I think that the lenders will make the decision. Also the lenders will make a decision who can afford to make the higher payments and who cannot, according to income and so on, and how much money there is available for that particular family. So they will be treating each one individually.

But one of the important things is that those people that cannot make the higher payments, that you keep them in the house. Because like I said, to lose a home hurts everybody. It hurts the family, it hurts the lender, the borrower, the neighborhood, the housing market. It hurts everybody.