115 California Consumer Groups Call Upon Home Mortgage Lenders to Halt Accelerating Foreclosures Caused by Predatory Loans
One hundred fifteen community and consumer organizations led by the California Reinvestment Coalition (CRC) today called upon six leading mortgage lenders to stem the statewide tide of home foreclosures resulting from predatory loans. The lenders are being asked to declare a temporary moratorium and direct homeowners to financial solutions that will allow them to keep their homes.
The San Francisco-based coalition, which advocates for equality in financial services for California consumers, sent letters to the Chief Executive Officers of Bank of America, Citibank, Countrywide Home Loans, Merrill Lynch, Washington Mutual and Wells Fargo. The letters ask the CEOs to halt foreclosures for the next six months and meet with community-based organizations to design solutions to the growing foreclosure crisis. The groups that joined CRC to write these letters have a common goal of providing affected homeowners access to financial advisors and services so they won’t join the thousands in California who have already lost their homes.
California is experiencing record-breaking foreclosure numbers, with 31,434 foreclosures in March alone — nearly triple the number of foreclosures in March of last year, according to Realtytrac. This surge in activity has pushed the state’s rate of foreclosures to nearly twice the national average, Realtytrac reported.
The letter calling for a moratorium was signed by leaders from communities affected by the increase in foreclosures, and mortgage counselors who are deluged by thousands of borrowers seeking help with deceptive, and in some cases fraudulent loans made by brokers, lenders and Wall Street firms. Although such problematic practices are more likely found in California’s neighborhoods of color, none of the state’s communities and borrowers is immune from bad lending practices, Stein said.
Borrowers affected by fraudulent loans include the elderly, non-English speakers who only saw English documents for their loan, subprime loan borrowers and borrowers whose incomes were misstated by brokers.
CRC warns that as housing prices decline, the foreclosure crisis will escalate. In 2006, 21 of California’s 26 metropolitan areas suffered housing price declines, which limit the ability of many borrowers to refinance loans. The problem of declining home prices can only worsen as more homes go into foreclosure, fueling a cycle of falling home values and increasing foreclosures.
A copy of the letter and more information is available at www.calreinvest.org.