ASSEMBLYMEMBER TED LIEU Contact: Dan Reeves (de León) |
Assemblymembers Lieu and de León Discuss the Fallout from the Subprime Mortgage Crisis in this Week's Democratic Weekly Radio Address |
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SACRAMENTO - In this week's Democratic weekly radio address, Assemblymembers Ted Lieu (D-Torrance) and Kevin de León (D-Los Angeles) present legislative remedies to reduce the impact of the subprime mortgage crisis.
English: Hello, this is Assemblymember Ted Lieu, chair of the Assembly Banking and Finance Committee. As our state faces looming budget shortfalls that threaten vital funds for infrastructure, public safety, and social services, the emerging sub-prime mortgage crisis is poised to jeopardize our attempts to salvage our state's financial commitments. Because reckless mortgage lenders issued variable interest rate home loans to folks that simply couldn't afford to pay their monthly bills, 1 out of every 88 homes in California are currently undergoing foreclosure. According to the Center for Responsible Lending, nearly 180,000 California homes will be lost to foreclosure from the 826,900 sub-prime loans made in 2005 and 2006 alone. California could lose nearly $3 billion in property tax revenue and another $1 billion in sales and transfer tax revenue. Remarkably, an estimated 61% of the sub-prime mortgage borrowers would have qualified for loans with more reasonable monthly payments, had their lenders not been so narrowly focused on short-term profits. But this isn't just a problem for those about to lose their homes. Home price are expected to decline in California by up to 20-percent and that's because each foreclosure within an eighth of a mile of a single-family home results in a 1% decline in the value of that home. And working- and middle-class neighborhoods are especially in danger of being blighted due to abandoned homes. While this is not uniquely a California problem, our state is especially hard hit, with five of the top ten areas with the highest foreclosure rates in the country, including Stockton, Riverside/San Bernardino, Sacramento, Bakersfield, and Oakland. And the response from the White House has simply been tepid and woefully inadequate. Clearly, the time for legislative action is now. Assembly Democrats have compiled a practical and effective package of bills to address our state's housing woes, and we have asked the Governor to call for a special session to bring to the table all interested parties. Our package includes bills that will identify at-risk borrowers and determine what lenders have done to assist them and ban prepayment penalties that essentially prevent borrowers from refinancing. Other bills add consumer real estate mortgage loans to the list of consumer contracts subject to California civil code translation requirements, protecting potential homeowners for whom English is a second language, and we hope to end incentives and kickbacks that spur lenders to push sub-prime loans onto buyers ill-equipped to afford their monthly payments. And our bills will improve counseling services that can protect consumers from bad loans and help them find potential avenues for keeping their homes, and we will introduce tough income verification regulations, requiring lenders to consider an applicant's ability to repay over the life of a loan. Assembly Democrats are committed to working in a bipartisan and pragmatic fashion to protect homeowners and preserve our state's fiscal solvency, and we hope others in Sacramento are equally committed. To allow these necessary reforms to be subject to partisan gridlock is literally not a luxury our state can afford right now. Thank you for listening. This has been Assemblymember Ted Lieu, chair of the Assembly Banking and Finance Committee.
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