Feinstein letter urges FDIC and Treasury to expedite mortgage relief, use economic rescue funds to assist struggling homeowners
Washington, DC – October 31, 2008 – (RealEstateRama) — U.S. Senator Dianne Feinstein (D-Calif.) today expressed strong support for efforts by Federal Deposit Insurance Corporation (FDIC) Chairman Sheila C. Bair to prevent home foreclosures by expanding federal loan guarantees and expediting procedures for mortgage workout agreements.
In a letter to Chairman Bair, Sen. Feinstein urged that immediate steps be taken to provide assistance to struggling homeowners during implementation of the recently enacted economic rescue program. Senator Feinstein noted that such relief is especially important to Californians because the State has been severely impacted by the foreclosure crisis and accounts for nearly 30 percent of all foreclosure activity in the United States.
A copy of Sen. Feinstein’s letter was also delivered to Treasury Secretary Henry Paulson.
Below is the full text of the letter:
October 30, 2008
The Honorable Sheila C. Bair, Chairman
Federal Deposit Insurance Corporation
550 17th Street N.W.
Washington, D.C. 20429
Dear Chairman Bair:
I write to express my strong support for your efforts to prevent foreclosures and expedite loan modifications through federal loan guarantees and standardized procedures for mortgage workout agreements. These are prudent and cost-effective steps to improve assistance for homeowners while also limiting foreclosures and stabilizing home values.
Foreclosures have had a devastating impact on our national economy, and the damage in my state has been particularly severe. California has the third highest foreclosure rate in the nation, with one in every 189 homes in foreclosure—more than twice the national average of one foreclosure per every 475 homes. At this rate, more than 800,000 foreclosures may be filed on California properties this year, a roughly 75 percent increase over 2007. Six of the top ten high foreclosure U.S. metropolitan areas are in California, and local communities are struggling to cope with the economic fallout.
It is critical that a portion of the funds provided in the recently enacted economic rescue legislation be immediately directed towards addressing the foreclosure problem. Utilizing the Federal Deposit Insurance Corporation model to standardize procedures for mortgage workout agreements based upon an appropriate debt-to-income ratio for borrowers will help expedite loan modifications. Moreover, I believe that providing federal loan guarantees will help incentivize lenders to offer more loan modifications to qualified borrowers while ensuring that taxpayer dollars are used efficiently.
Foreclosures are in the best interest of no one. Neighborhoods are decimated when homes are repossessed or left vacant, property values decline, local economies suffer, and crime often increases in blighted areas. Lenders must sustain the costs of foreclosure and are left with the burden of reselling properties in a distressed market. Homeowners are forced to give up on the American dream, and in some cases, tenants are forced out of homes they have been renting.
I know that you recognize the importance of this issue and I appreciate all of your hard work in developing practical solutions to assist struggling homeowners. Please keep my office closely advised of your progress. If I can be of any assistance, please do not hesitate to call me. I look forward to discussing further steps that can be taken to reduce foreclosures.
Thank you very much for your time and consideration.
United States Senator
cc: The Honorable Henry Paulson, Jr. – Secretary of the Treasury