Real Action We Can Take on California’s Subprime Mortgage Crisis

[courtesy of California Progress Report]

By Ted Lieu
Chair
California State Assembly Banking and Finance Committee

Yesterday, online data clearinghouse DataQuick.com released new information on the foreclosure crisis gripping California. Allow me to summarize for you – there’s bad news, and then there’s worse news.

In the fourth quarter of 2007, California had a 421% increase in foreclosures compared to the same period in 2006. In addition, 81,550 California homeowners received default notices (the first step in foreclosure). That was a 12.4% increase from the previous quarter and a 114% increase from the fourth quarter of 2006.

We’re in a crisis. And it’s an expanding and exploding crisis.

To this point, there seems to be a standard Republican answer – downplay the severity of the crisis, bring in the lenders for a meeting, secure a bunch of entirely voluntary promises that reinforce what the lenders are allegedly already doing, and then hold a press conference to declare victory. Our Governor followed the script in November; President Bush followed in December.

Our Governor said he thought this crisis was merely a “bump in the road.”

Well, the numbers are in and the Republicans’ completely unrealistic approaches have hit the cold, hard facts of reality. Californians are still losing their homes in record numbers. The people of California deserve better.

That’s why I and my Democratic colleagues in the Assembly are taking real action. I recently introduced Assembly Bill 1830, the Subprime Lending Reform Act of 2008. I was proud to have 36 of my fellow Assembly Democrats join me as co-authors of this legislation, including Speaker Fabian Núñez as a Principal Co-Author.

If enacted, AB 1830 will be the most comprehensive reform of mortgage lending in our State’s history, and the most aggressive mortgage reform in the nation. It will: