Schwarzenegger Unveils Part of California Economic Stimulus Package: 90-Day Freeze on Pending Home Foreclosures
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Yesterday, Governor Schwarzenegger proposed a 90-day freeze on pending home foreclosures to provide needed relief to a squeezed California economy and to provide more time for homeowners to seek a loan modification.
This proposal is part of a larger economic stimulus package for the state that he anticipates will be put in front of lawmakers in a special session of the Legislature that is supposed to begin today.
However, the governor's plan for "loan modifications," another component to his economic stimulus plan, would be based on FDIC chairwoman Sheila Bair's approach to rewriting loans at IndyMac, which has had mixed results thus far.
Schwarzenegger's 90-day freeze is fortunately paired with his loan modification tactic, allowing homeowners to seek an FDIC-like loan modification from their lender (based on the FDIC IndyMac blueprint) or seek one on their own (legal representation, loan modification counseling, etc).
Schwarzenegger said, "The single most powerful action our state can take to shore up its economy is to help Californians stay in their homes [. . .] Curtailing foreclosures will stop the downward spiral of home prices, free up needed cash for homeowners, help save jobs and make an immediate positive impact on our economy."
Even Assemblyman Ted Lieu (D-Torrance), who has been dubious about the governor's stance on the mortgage crisis for months now, is pleased with this idea. "What the governor has proposed is a good first step [. . .] I'm pleased that the governor recognizes that banks and mortgage are not capable of regulating themselves. California has the responsibility and the obligation of raising the standards."
And California SHOULD raise "the standards" when it comes to attacking the mortgage crisis, considering the State has some of the highest condensed foreclosure areas throughout the country. Leaders of the state Senate agreed that Sacramento needed to do more to help strapped homeowners, but there are still a lot of question marks as to which approach will be the best for everyone involved.