Do something about foreclosures, California Democrats urge Obama [updated]
"They don’t get it,"Rep. Dennis Cardoza of Atwater said at a Capitol Hill news conference. "The administration has simply not done a darn thing to help my constituents."
"Everything to date, as well intended as it may have been, has not provided the assistance that we need," added Rep. Mike Thompson of St. Helena.
The Democratic delegation sent a letter to President Obama calling on him to take steps that some housing advocates have been unsuccessfully pushing since the financial crisis in 2008.
They include refinancing all mortgages owned or guaranteed by seized housing finance giants Fannie Mae and Freddie Mac, a push to allow the principal on some underwater mortgages to be written down through bankruptcy to avoid foreclosures, and establishing a “Homeowner’s Bill of Rights” that would require mortgage servicers to review documents in a timely fashion and make other consumer-friendly changes.
Obama has called recently for federal regulators overseeing Fannie Mae and Freddie Mac to let more homeowners refinance, but has rejected calls for a mandatory refinancing of all of the firms’ mortgages, which could add to their soaring bailout tab.
Experts have said Congress would have to pass legislation to allow principal write-down through bankruptcy proceedings -- a move it has been rejected in the past -- but the California lawmakers said they thought the move could be implemented by the administration on mortgages owned or backed by Fannie and Freddie.
"We continue to hear from our constituents that servicers are uncooperative, misleading and even deliberately obstructive, and we have not seen successful efforts from your administration in response," they wrote.
"Until the housing market is stabilized, our economy will not be able to fully recover," the letter says.
The unusual criticism of the Democratic president's administration from members of his own party comes amid signs that the foreclosure crisis is worsening and as lawmakers look ahead to a difficult election next year.
Cardoza, whose Central Valley district has been especially hard hit by foreclosures, was among the harshest critics, saying the problem has been exacerbated by an administration that has "not gotten it right over and over and over." He complained that administration officials have displayed a "total lack of urgency" in addressing the crisis.
The Democrats complained that months after they requested a meeting with Vice President Joe Biden, they haven’t received a response.
Rep. Jim Costa of Fresno said that although Obama in a recent speech to Congress vowed to help "responsible homeowners" refinance their mortgages, "we’re still looking for the plan."
On Wednesday evening, the White House responded:
"The president is focused on taking steps to help struggling homeowners, particularly in states hardest hit by the housing crisis," said spokesman Adam Abrams.
He cited $2 billion committed to California through the Hardest Hit Fund, Obama's recent announcement to provide 12 months of mortgage forbearance to unemployed borrowers, efforts to turn vacant property into rental housing, and knocking down barriers "to allow more responsible borrowers to refinance into lower interest rate mortgages.”
-- Richard Simon and Jim Puzzanghera in Washington
Photo: A foreclosure sign sits in front of a home in Milpitas, Calif. Credit: Tony Avelar / Bloomberg News