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States Call for Moratorium on Home Foreclosures
By J. Mijin Cha
Policy Specialist
Progressive States Network
Not surprisingly, the Bush Administration's proposal for fixing the subprime lending crisis is an industry-led deal that involves completely voluntary actions to fix the current crisis and will ultimately help only a few of the millions of people who have either lost or are in danger of losing their homes. With absolute failure at the federal level, it is again up to states to step in. In two recent editorial pieces, the executive directors of the Progressive States Network and the Drum Major Institute called on New York Governor Spitzer to impose a six-month moratorium on foreclosures to stop the rapidly increasing rate of home loss, a policy all governors should enact. A moratorium would give lenders incentive to restructure loans on fair terms and fight back against the Wall-street backed predatory lenders.
We previously highlighted how states are taking over for federal inaction, and misaction, in fighting the current mortgage crisis. New York Assemblyman Jim Brennan is introducing legislation to impose a one-year moratorium on home foreclosures. Massachusetts became the first state to impose a moratorium last year. Without action, in the next two years, as many as 100,000 homes would be subject to foreclosure in New York. Nationwide, home foreclosure filings have increased an incredible 68% over the period of just one year. The rate is predicted to increase even further this year as payments rise on roughly 1 million home loans. Movements are also underway in Michigan, Ohio and Texas to adopt foreclosure moratoriums.
As a recent report by the US Conference of Mayors highlighted, the ripple effects on local economies from mass foreclosures would be devastating. Nationally, groups like the AFL-CIO and the NAACP are also calling for a foreclosure moratorium to give homeowners a chance to re-finance and restructure their subprime loans. Illinois Congressman Danny Davis, facing a rate of 70 foreclosures per square mile in his district, is proposing legislation that would implement a 90-day moratorium on foreclosures, free homeowners from the threat of eviction during the winter months, and allow lenders to rent the homes at fair market value while the property is in foreclosure proceedings.
Senator Hillary Clinton has also called for a three-month moratorium on foreclosures. Presidential candidate John Edwards goes even further and would impose a moratorium on foreclosures until he, as President, would decide that the housing crisis is over.
Additional resources on foreclosures:
Stop Foreclosure Resource Center
Neighborhood Assistance Corporation of America
Brooklyn Eagle - Brennan Bill Would Impose One-Year Moratorium on Mortgage Foreclosures
U.S. News and World Report - 6 Things to Know about Bush's Plan
US Conference of Mayors - The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas
J. Mijin Cha is a Policy Specialist with the Progressive States Network focusing on assisting legislators and organizations in promoting Smart Growth and Clean Jobs. She recently completed her PhD in law from the Univ. of London, School of Oriental and African Studies studying access to justice and environmental justice movements in India and the U.S. Prior to joining Progressive States, she worked in Nepal on a project increasing access to environmental justice in rural areas of South Asia. She has worked with grassroots groups in several countries and is a member of the California Bar.
Comments
this moratorium reduced the inventory of houses for sale so many first time home buyers hoping to get their 8k tax credit are fighting for the small # of homes available in the market. I know the people who lost their homes are happy cus' they get to live there longer for free, but the investors (buying cash) are loving the situation...this moratorium needs to go away so that people with low incomes can afford a house (example: when there's a house priced at 65k it ends up selling for 75k cash, even when I --VA loan--offer 90k) it's a fake rise in prices we are overpaying (salaries are falling)!!! TAKE THIS MORATORIUM AWAY!
Posted by: silvia at August 11, 2009 11:38 PM
this moratorium reduced the inventory of houses for sale so many first time home buyers hoping to get their 8k tax credit are fighting for the small # of homes available in the market. I know the people who lost their homes are happy cus' they get to live there longer for free, but the investors (buying cash) are loving the situation...this moratorium needs to go away so that people with low incomes can afford a house (example: when there's a house priced at 65k it ends up selling for 75k cash, even when I --VA loan--offer 90k) it's a fake rise in prices we are overpaying (salaries are falling)!!! TAKE THIS MORATORIUM AWAY!
Posted by: silvia at August 11, 2009 11:40 PM
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