In Sacramento, California, one citizen is taking on the lenders directly, using his “Foreclosure Modification Act” to demand that lenders provide principal and interest rate reductions in order to keep borrowers in their homes[1]. And according to the author of the proposal, David A. Benson, the best way to make this happen is to leave banks with no other option for dealing with delinquent homeowners by simply outlawing foreclosures in the state. His amendment states:
“Any home loan shall be able to be refinanced without credit review or penalty at minimum cost within 45 days of being requested by the original loan borrower or homeowner” as long as the property has been owned – and the loan maintained - by the borrower for at least three years. Benson calls the right to modification and principal reduction a “fundamental right.” The proposal has already been cleared by California’s secretary of state, but still needs 807,615 signatures in order to be listed on the ballot. Although many support the bill, it may conflict with provisions in both the U.S. and state constitutions as well as federal laws and regulations governing federally chartered lenders, warn the nonpartisan legislative analysts and the California governor’s director of finance[2]. Additionally, it could cost local governments billions in revenues from property taxes and other fees and assessments.
Do you think that outlawing foreclosures is a viable option?
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[1] http://www.dsnews.com/articles/california-citizen-proposes-amendment-outlawing-foreclosures-2011-08-02
[2] http://www.centralvalleybusinesstimes.com/stories/001/?ID=19012
Only in California would something this ridiculous even gain SOS approval. Lets assume it passed. Who would lend in that state?
Excellent idea. If they want to lend they must help the homeowner.
What ia the other choice? Put families out on the street? The impact of foreclosures is a lot more than just money. The ultimate moral choice we must make is should people’s lives be governed JUST by a profit margin. Either we believe we should help our fellow beings or we should leave them to whatever fate befalls them?
We cannot force banks to have a social conscience or a concern for the community, but if there is a law against forclosures, the lenders would have no other choice but to bargain.
The banks are up to their necks in causing our present financial crisis. They were bailed out to the tune of one trillion dollars – they got enough. Now, they are whining and making a deal with the Justice Department to escape criminal prosecution and lawsuits (and pushing for more deregulation). Is there no end to this criminality?
Make foreclosures illegal in the entire country. It would be one step in regulating runaway banks that are running away with our money.
As far as costing billions in taxes to local governments, I say too bad! My local taxes are through the roof. In six years, the school taxes went up 37% all the while as property values plummeted – the same with property taxes.
I invested in property as did the bank. I lost money on my property, as an investor, why shouldn’t the bank also take a corresponding loss?
asinine proposal, i’d like some free money with no responsibility also please. how could that possibly pass, what up to date homeowner would sign a bill to let their delinquent neighbor lower their agreed upon rate and term, perhaps in cases of death, disability, sickness, etc. should a mod be allowed, but who will pay for the mod, the government, and really why should a bank or the govt. pay for the welfare mortgage mod handout, the needy party should have disability, life, and health insurance to cover the expenses, as well as adequate savings.
What ever happened to accountability? What good is a contract if it can be changed? If this passes, why would anyone even lend money? Just give the houses away to all and that will end the foreclosure problem.
The cities and counties are going to lose tax revenue anyway. Consider a house with an assessed value (in California, that is based on the last sale price) of $600,000 with an outstanding loan of $500,000, but a current market value of $300,000. If the property goes to foreclosure, the bank will probably sell it for $250,000. That would be the basis for the new assessed value. If refinanced at $300,000 value, the taxing authorities would be better off.
Forcing lenders to work with homeowners should be law all over the country. These same lenders caused the problems for which we are now expected to pay by losing our assets. Concentration of power in the hands of few is not Democracy. Now a Super Congress of 12 to make decisions affecting all–Where is that in the Constitution? If Americans don’t wake up and demand these abuses of power stop; we will all be living in a 3rd. world country.
HAMP and HAFA are nothing but an attempt to put forth a SHOW for the public. Nothing constructive has been done for mainstreet. If bailout monies had been put into the hands of the taxpayers who paid them into the system; we would have been able to pay mortgages, reduce debt, save and spend enough to keep our economy humming. Instead it sits with the banks to fatten their own bottom lines and lend nothing; the purpose for which the monies were given to them to begin with–with no requirement for accountability. Washington is self-serving; not stewards of this great country!
Servicers, who seem to be the majority dealing directly with the owners and investors. they seem to have no motivation to be concerned with what is in the best interests nof either group, the country or the greater economy. They bare however completely empowered to do such modifications on behalf of the investors but choose not ot unlessed forced. It is the bad mortgages already in place not the future mortgages that are the issue. Many investors will get nothing after servicers take their “due” after forclosure. Meanwhile they keep making profits on abandoned foreclosed property that eventually sells for very little. They are billing against the entire tranch bundle not just the individual property.
They need to be forced to act better.
Who is this moron? I suspect, a bankruptcy lawyer. If this idiotic thing is passed (and there’s almost no chance of that – it’s in conflict with all sorts of other laws, and with the State Constitution), even more people who can’t afford a house will run out to buy one – since they’d be guaranteed they wouldn’t lose it.
Heck, I might even stop making mortgage payments.
The banks, though, would have a simple solution: no more home loans. You want to buy a house? Come up with $250,000 in cash. A cashier’s check will do.
The problem was caused by too many people who couldn’t afford a house getting loans – because the Democrats told the banks (and FNMA) “you gotta lend people money! They gotta have a house!!”