New America Foundation Praises Governor Arnold Schwarzenegger’s Leadership in Responding to Sub-prime Mortgage Loan Crisis
Today, California Governor Arnold Schwarzenegger announced an agreement with four large servicers of sub-prime mortgage loans to “fast-track” modifications to those loans so that homeowners who have been current, but are facing unaffordable loan payment resets, will be able to stay in their homes over the long term. The program builds on a proposal by FDIC Chair Sheila Bair that servicers freeze interest rates at current rates for homeowners who have been making timely payments on sub-prime loans with interest rates scheduled to reset.
California is the nation’s single largest state in terms of mortgages outstanding, and in September, had the third highest foreclosure rate in the country. Six California cities were among the top ten metro areas for foreclosures. And house prices continue to fall, adding to pressures not only on homeowners facing foreclosure, but their neighbors and communities.
Ellen Seidman, Director of the Financial Services and Education Project at the New America Foundation, and a former Director of the Office of Thrift Supervision, said, “Governor Schwarzenegger has shown strong leadership in getting four large servicers of subprime loans to agree to fast-track loan modification procedures that enable homeowners to keep their homes. By modifying the loans so that homeowners facing unaffordable loan resets will meet their obligations going forward by making the same level of payments they have in the past, at the same (rather than an increased) interest rate, all parties—homeowners, lenders, investors, communities and the state—will benefit.”
Related Programs: New America in California, Asset Building Program, California Asset Building
Topics: Ownership & Assets
