California Congressional democrats are accusing the Obama Administration of not doing enough to help the growing number of homeowners slipping into foreclosure. After meeting with administration housing officials, the lawmakers are sending their message directly to President Obama.
Democrat Anna Eshoo of Palo Alto has two words to describe her meeting last week with Obama’s housing chief Edward DeMarco: "tepid and defensive." She says she asked the acting director of the Federal Housing Finance Agency whether he’d ever met a family trying to save their home from foreclosure.
“He hadn’t,” she says.
Congressman Dennis Cardoza represents California’s Central Valley, the region hardest hit by foreclosures. His voice shook with emotion as he described the Obama administration’s response to the housing crisis.
“None of their programs have worked!” says Cardoza.
32 House Democrats from California signed a letter to the President, asking that Fannie Mae or Freddie Mac, which guarantee nearly all mortgages in the US, give homeowners – even those underwater - the opportunity to refinance at historically low rates.
Congresswoman Zoe Lofgren of San Jose says it won’t cost the taxpayers anything. Banks, she says, are another story. “The banks are going to eat a loss eventually,” she says. “The question is when.” Lofgren says the banking industry’s financial hit “has been deferred to the detriment of the American public.”
Congresswoman Jackie Speier of San Bruno said allowing consumers to refinance will put "real money" into pockets of American consumers, hundreds of dollars a month they would otherwise pay towards a higher interest mortgage.
The lawmakers also want the federal government to make its homeowner assistance programs more user-friendly. Democratic Congresswoman Judy Chu of El Monte says existing programs aren’t helping.
“I’ve had residents come to me in tears, she says. “They thought that they followed the procedures of the bank, and yet were still foreclosed upon. And yet there are those other residents who just can’t even get a phone call returned.”
Republican Congressman John Campbell of Irvine did not sign the letter, stating, “"I agree with their sentiments, but not their solutions." Campbell’s solution is to create a new housing finance system to replace Fannie Mae and Freddie Mac.
In response to the lawmakers' letter, a White House spokesman says the President is "focused on taking steps to help struggling homeowners, particularly in states hardest hit by the housing crisis. This includes not only the $2 billion in funds committed directly to California through the Hardest Hit Fund, but the President's recent announcement to provide 12 months of mortgage forbearance to unemployed borrowers through the FHA and HAMP programs, and the Administration's efforts to transition vacant property into rental housing. The President is also working with the federal housing agencies to knock down barriers to allow more responsible borrowers to refinance into lower interest rate mortgages."
One in three Californians owes more on their house than it's worth.