Assembly Democrats to Schwarzenegger: Wake Up and Smell the Foreclosures—Special Session Should Deal With Mortgage Reform—Action Seen as Linked to Making Progress on the Budget

“I call on the Governor to refocus his Administration’s priorities and make mortgage reform and foreclosure prevention one of its top priorities. California’s economic recovery cannot begin, and our budget will not stabilize, until we reform the dysfunctional mortgage system that led to this crisis and staunch the staggering number of foreclosures in California.

“I reiterate my call that it makes no sense to set a special session on the budget without simultaneously dealing with foreclosure and mortgage reform. More than four billion dollars of last year’s budget gap was due to the foreclosure crisis and billions more will be lost for this year’s state budget as a result of the housing mess. Speaker Karen Bass is absolutely right that any special session must include an economic stimulus package consisting, in part, of foreclosure and mortgage reform.

“The Governor unfortunately has actively blocked legislative efforts to fix this crisis. Last month he sided with special interests in the mortgage industry and on Wall Street and vetoed numerous foreclosure and mortgage reform bills that would have helped Californians, such as AB 1830, a comprehensive subprime mortgage reform bill. It is not too late, however, to address foreclosure and mortgage reform, and the Governor can still help fix a dysfunctional mortgage system through new reform legislation that the Legislature intends to introduce.”

Here is the letter signed by the Assembly Democratic leaders on Friday:

The Honorable Arnold Schwarzenegger Governor, State of California
State Capitol
Sacramento, CA 95814

Dear Governor Schwarzenegger:

Last year, 45 members of the California Assembly signed a letter to you regarding the mounting mortgage and foreclosure crisis in California. The letter, dated September 12, 2007, noted that more action was necessary. Unfortunately, since 2007, the crisis has worsened. According to RealtyTrac, California accounts for one-third of the nation's foreclosures. In August, California had over 101,000 foreclosure filings, the most of any state. That was one foreclosure filing every 30 seconds. Until we staunch the tidal wave of foreclosures, the economy in California will not improve.

Mortgage reform and foreclosure prevention has been at the top of the Assembly's legislative agenda and will again be at the top of the agenda this session. We ask you, once again, to take a closer look at mortgage reform and foreclosure prevention so we can forestall future loss.

We understand you are considering calling a special session to address the state budget. Four billion dollars of last year's budget deficit is attributable to the foreclosure crisis and billions more will be lost this year if nothing is done to address this crisis. The special session would be an appropriate time to address California's mortgage system.

We appreciate the bills you did sign this year, and some of them have had a positive effect on mitigating foreclosures, but as the media recently reported, foreclosures continued to surge to record numbers the last three months. We also understand that you had a compressed time frame to deal with several hundred bills and therefore, should you call a special session, we ask you to put mortgage reform at the top of your agenda.

The Legislature will continue to seek common sense solutions to address this growing problem by examining legislation and programs implemented or proposed in other areas, such as New Jersey, Philadelphia, North Carolina, and New York.

Now, and in the upcoming legislative session, we would like to continue to work together to fix a broken mortgage system, help people stay in their homes, and begin California's economic recovery. We look forward to working with you and hope mortgage reform and foreclosure prevention will be your top priorities.

Sincerely,
Karen Bass
Speaker of the Assembly

Pedro Nava
Chair, Assembly Banking and Finance Committee

Ted Lieu
Chair, Assembly Rules Committee