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Preventing Foreclosures: It's Time For Banks To Pick Up The Tab

by ACCE, California Reinvestment Coalition (CRC), PICO California

Last week, Attorney General Kamala Harris once again refused to accept the terms of a $25 billion multistate settlement with the nation's largest banks over their foreclosure practices. As a diverse coalition of community and faith-based groups, unions, students and progressive organizations, ReFund California commends Attorney General Harris for standing firm in her commitment to secure a strong settlement for the millions of families who have lost their homes due to the reckless conduct of the nation's largest banks. Without a meaningful amount of principal reduction, transparency, and enforcement, the settlement was too weak for California. Attorney General Harris's leadership on this issue, including launching her own investigation in California, no doubt contributed to the Obama Administration's decision to launch a new federal mortgage investigation unit.

These recent announcements represent important steps forward, but there is still much work to be done. Any state or federal investigation must hold banks accountable for their dubious and irresponsible practices, and provide meaningful relief for homeowners. Millions of individuals and families need help now in order to hold on to their homes. Time is of the essence. In the next six months in California more than 100,000 borrowers could lose their homes without meaningful due process. It is critical that we expeditiously move forward with securing the policies and protections necessary to put an end to unwarranted and unjust foreclosures.

Here in California, our state legislature can and should move quickly to start enacting these protections before more Californians lose their homes. California needs a comprehensive legislative package this year that establishes fair and transparent practices that provide due process to homeowners in California and keep families in their homes. We call upon our state legislators and the Governor to stand up for homeowners in the coming legislative session.

While terms of a multistate settlement are being negotiated and DOJ Task Force investigations continue, we are united in the calling of an Extra Ordinary or Emergency Session of the State Legislature to slow or stop the foreclosure mill until due process and principal reduction can be achieved for California’s over two million mortgages that are underwater, in default or in foreclosure.

Legislation and investigations in California will be absolutely crucial for Californians, but the federal government needs to undertake comprehensive policy changes. The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, has failed to prevent countless foreclosures because of their irresponsive policies. FHFA absolutely refuses to reduce principal on Fannie and Freddie loans. They provide incentives to servicers who expedite the foreclosure process, and support the pernicious “dual track” process whereby homeowners lose their homes when they were in the midst of negotiating a loan modification with their servicer.

They have not done enough to ensure that tenants living in foreclosed homes have a meaningful chance to continue renting the home and avoid displacement. They effectively own thousands of empty, foreclosed properties across the country, and have expressed no interest in turning them over to nonprofits to make sure that they end up as a home for a community member instead of profit-seeking investors. Just today, ProPublica and NPR revealed that Freddie Mac has structured securities deals that allow it to profit if homeowners remain trapped in high-interest home loans. As taxpayers who essentially own these loans and this agency, FHFA claims that they are protecting taxpayer funds. What they fail to admit is that taxpayers are homeowners too, and we are losing our homes at the hands of their irresponsible policies.

As Attorney General Harris remains strong in her commitment to obtain far-reaching relief and policy reform, we hope that our state legislators and the federal government start to enact strong policies that protect homeowners now and in the future. The time to act is now.

This was originally posted at California Progress Report at http://www.californiaprogressreport.com/site/preventing-foreclosures-its-time-banks-pick-tab

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ReFund California is a growing coalition of community and faith-based groups, unions, students and progressive organizations who have come together to build public and political support for holding big banks accountable to the needs of families and communities and calling upon big corporations and the wealthy to pay their fair share to fund education and vital services and solutions to get our economy back on track.

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