California's Foreclosure Crisis

Resolutions Number SAC09.76

California’s Foreclosure Crisis

WHEREAS, California is ground-zero for home foreclosures, accounting for approximately one-third of the entire nation's foreclosures. In February 2009, California saw 80,775 foreclosure filings, the most of any state and a 5% increase from the prior month, amounting to one foreclosure filing every 30 seconds. Six of the ten cities in the United States with the highest foreclosure rates are in California, including Stockton, Modesto, Merced, Riverside-San Bernardino, Bakersfield and Vallejo-Fairfield; and

WHEREAS, the continuing financial implosion and foreclosure crisis shaking America has at its core the making and selling of unsuitable home loans during the mortgage frenzy that resulted in a massive wave of foreclosures, and the collapse of financial giants Lehman Brothers, Merrill Lynch, Indy Mac, Washington Mutual, and Wachovia; the taxpayer bailouts of Bear Stearns, Fannie Mae, Freddie Mac, Citigroup, Bank of America, and AIG, and the bailout by taxpayers of hundreds of billions of dollars in troubled assets from numerous other lenders would not have happened if more effective laws and regulations were in place to prevent predatory and unsuitable home loan practices; and

WHEREAS,
the solution to this national foreclosure crisis requires a multi-pronged approach based on federal and state efforts, including federal policies that help distressed homeowners avoid foreclosure through refinancing or a loan modification program and substantive state reforms, including a ban on steering consumers to higher priced loans, a ban on negative amortization loans, enacting a strong fiduciary responsibility for mortgage brokers, and the establishment of strong penalties to prevent future abusive sub-prime lending; 

THEREFORE BE IT RESOLVED, that the California Democratic Party commend President Barack Obama’s leadership to solve this national foreclosure crisis.  The incentives his administration is creating to get lenders to bring relief to millions of families who are struggling to stay in their home is a critical part of the solution to stabilize the housing market and to keep Californians in their homes; and

BE IT FURTHER RESOLVED, that the California Democratic Party supports state and federal efforts to expand existing federal refinancing programs so even more Californians can qualify and encourages the enactment of substantive state reforms, including a ban on steering consumers to higher priced loans, a ban on negative amortization loans, enacting a strong fiduciary responsibility for mortgage brokers, and the establishment of strong penalties to ensure a foreclosure crisis of this scale will never happen again.

Submitted by Assemblymember Ted Lieu; Adam Gray & Merced Democratic Central Committee

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Adopted by the Executive Board
Of the California Democratic Party At its Executive Board Meeting
Crowne Plaza Hotel, Burlingame
July 19, 2009

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