Sacramento, CA:  Assembly Member Wilmer Amina Carter (D- Rialto) successfully passed legislation from the Assembly Housing and Community Development Committee to prevent future housing foreclosures.  Assembly Bill 2509, jointly authored with Assembly Member Cathleen Galgiani (D- Livingston), would create the Homeownership Preservation Mortgage Guarantee Program to assist credit worthy homeowners who are faced with the possibility of foreclosure. 

“We need solutions to this foreclosure crisis now and I am proud to author legislation to provide credit worthy homeowners with refinancing opportunities so they can keep their homes,” stated Carter. “I am committed to educating homeowners about alternatives to foreclosure and creating a financing system that doesn’t victimize our working families.”

The current foreclosure crisis can be largely attributed to the defaults in sub-prime and non-traditional mortgages that have reset to unaffordable levels.  It is predicted that 350,000 homes will foreclose in California during 2008 and 2009. Much of the foreclosure crisis is credited to sub-prime and non-traditional mortgages at risk of default.  California’s 2007 foreclosure rate – one filing for every 52 households – ranked fourth in the nation, while the number of California foreclosure filings ranked first.  While this crisis impacts all Californians, the Inland Empire has been heavily hit.   This year, seven of the top ten cities with the highest metro foreclosure rate were in California cities, with San Bernardino coming in at number five.

Home foreclosure affects an owner’s circumstances with the threat of bankruptcy, poor credit ratings and huge tax liabilities.  However, foreclosures reach even further to have negative impacts on neighboring homeowners, local governments and California’s greater economy. These damaging effects included increases in abandonment and vandalism, an estimated $100 billion loss in property value, and an estimated $4 billion loss of property and sales tax revenues for local governments.

Unless credit worthy homeowners who otherwise could afford to stay in their homes are given an opportunity to refinance out of these loans, California will continue to experience a rising rate of foreclosure and the negative ripple effects that impact the state and local economies.

“AB 2509 is a step in the right direction,” said Carter.  “This bill will provide a mortgage guarantee program in order to assist homeowners who may be at risk of losing their homes due to the structure of their current mortgage agreement.”

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