Sen. Barbara Boxer has released a 15-point plan she thinks will help stop foreclosures in California.
"Time is not our friend," Boxer said during a telephone press conference Wednesday afternoon. "We are in a crisis, and we need to stop the bleeding."
Boxer expressed concern about the 8,000 homes lost to foreclosure last year in Stanislaus, San Joaquin and Merced counties. That was about one of every 50 homes in the region.
"What you have is a vicious cycle because as values go down, it doesn't pay for people to stay in their homes (or try to avoid foreclosure)," Boxer said.
She said abandoned homes too often become eyesores. "If a neighborhood starts going downhill, the home prices keep going down," she said, noting that lower home values can cause even more foreclosures.
"We've got to stem the tide," Boxer said. "We're in a downward spiral, and if this is allowed to free-fall ... there's no telling the impact it will have on communities."
Boxer's staff held a series of community round-table discussions in California about foreclosures, including one Jan. 11 in Stockton. Suggestions from those discussions were considered in drafting her proposals.
Here is Boxer's 15-point action plan for stopping foreclosures:
Turn foreclosure roundtable decision groups into ongoing community working groups to address the crisis.
Ensure that new Department of Housing and Urban Development funding for counseling reaches California communities quickly and effectively. HUD and the Federal Housing Administration should ensure that California borrowers are able to access their full range of products and services.
Work closely with the HOPE NOW coalition and major California lenders and servicers to ensure they live up to the commitments to freeze interest rates and speed up the review and modification process. HOPE NOW is an alliance of counselors, investors, lenders and servicers that is working to maximize outreach efforts to homeowners in distress.
Encourage Congress to explore initiatives immediately to freeze interest rates for borrowers in danger of foreclosure.
Allow bankruptcy judges to modify unaffordable mortgages on a homeowner's primary residence, the same power judges already have for vacation homes or investment property.
Insist the Federal Reserve and Office of Thrift Supervision require Bank of America and Countrywide Financial to demonstrate significant progress in modifying loans as a condition of approving their merger.
Advocate new Community Development Block Grants to purchase and rehabilitate foreclosed properties. Funds should go to local governments in the most affected areas, where they could be used to maintain or purchase foreclosed homes to preserve and protect communities.
Advocate additional funding for nonprofits to help borrowers by providing foreclosure prevention activities, including counseling, legal services, training and prepurchase counseling for all subprime loans.
Advocate for higher loan limits for FHA, Fannie Mae and Freddie Mac qualifying loans. The Senate-passed FHA bill would raise loan limits from the current $362,790 to a maximum of $417,000, while the House-passed bill would allow loans up to nearly $830,000.
Expand the Federal Trade Commission's enforcement authority to cover unfair and deceptive acts and practices committed by federally chartered depository institutions, which are governed by the federal financial regulators. FTC already has enforcement authority over non- depository institutions.
Support local government requirements that lenders maintain foreclosed properties.
Establish licensing and registration requirements for all loan originators and provide funding for anti-fraud enforcement activities.
Request a Government Accountability Office study on options to establish a land trust to buy the land beneath foreclosed properties. That could allow existing structures to be resold to homeowners at reduced prices.
Require that homeowners be notified when their loans are sold so the loan holder can be identified easily and contacted.
Provide funding for and encourage high school financial literacy programs.