California Assembly Banking and Finance Chair Ted Lieu’s Statement in Response to President Bush’s Most Recent Subprime Mortgage Plan

SACRAMENTO – Assemblymember Ted Lieu (D-Torrance), chair of the California Assembly Banking and Finance Committee, today issued the following statement after President George Bush further clarified his office’s approach to address the subprime mortgage crisis:

“President George Bush’s recently announced tepid plan to help a small slice of homeowners in distress is woefully inadequate to stem the exploding mortgage foreclosure crisis.  More homes have foreclosed this quarter than during any other time period in American history, and next year will be even worse.  What we need is substantial reform, not baby measures whittled down by industry. 

“The Center for Responsible Lending estimates the Bush plan to help 7% or less of borrowers, approximately 145,000.  To put this into perspective, in October 2007 alone according to RealtyTrac, there were 224,451 foreclosures.  Given the scope of the mortgage crisis, the Bush plan is like putting a finger in a dam that is collapsing. 

“First American LoanPerformance, a research firm, estimates that 61% of subprime borrowers had actually qualified for fixed-rate, prime loans.  At a minimum, the Bush administration needs to expand its proposal to include the 61% of borrowers who actually had qualified for prime loans.  Those borrowers should have their loans restructured or refinanced into fixed-rate, traditional loans.  The Bush Administration needs to go back to the drawing board and come back with a realistic proposal that will actually make a difference."