Foreclosure freeze movement gains national attention

Legal News Line Sep. 16, 2008, 4:13pm

Mike Aguirre

Jerry Brown (D)

SAN DIEGO, Calif. (Legal Newsline)-The San Diego City Council resisted a high-profile attempt to put the city on the leading edge of a national push for a moratorium on foreclosures last week.

But the "movement," as supporters now call it, gained national support when four U.S. senators lobbied chief executives at Fannie Mae and Freddie Mac to implement a temporary foreclosure freeze late last week.

San Diego City Attorney Mike Aguirre said he hoped to convince the San Diego City Council to declare a "foreclosure crisis" in this southernmost California metropolitan area, which has been among the hardest hit in the state by foreclosures in the last two years.

Aguirre, backed by activist organizations like Greenlining Institute and the local Mabuhay Alliance, advocated a temporary foreclosure freeze during the council's Sept. 9 meeting.

As part of the resolution, Aguirre urged council support for the 38-percent solution created by the Federal Deposit Insurance Corp. During the meeting, an FDIC representative explained the temporary freeze solution it is using to assist IndyMac's customers.

In August, FDIC Chair Sheila Baer announced a 38-percent solution, which puts a cap at 38 percent of a borrower's income that can be applied to mortgage, tax and insurance payments. It includes a step-by-step process of evaluating mortgages and reducing payments below the 38-percent threshold and thereby avoiding foreclosure.

The City Council refused to endorse Aguirre's resolution, instead sending the issue to its Joint City and County Reinvestment Task Force for further evaluation.

After Aguirre failed to win support for his resolution from the City Council, he issued a press release saying the local effort is "picking up support from powerful national leaders."

Sens. Charles Schumer, Robert Menendez, Sherrod Brown and Bob Casey sent a letter seeking a temporary foreclosure freeze for Fannie Mae and Freddie Mac, which were recently taken over by the federal government. The moratoriums, the letter stated, would allow "time to modify loans and make them affordable for struggling homeowners."

Aguirre said without a foreclosure freeze, more neighborhoods would face decay and abandonment.

"Saving neighborhoods by keeping families in their homes is a better option than foreclosure," Aguirre said, "and a national consensus supporting that wisdom is galvanizing. We are better served it we turn off the automatic foreclosure switch."

During a phone interview last week, California Attorney General Jerry Brown, who was the first attorney general to sue Countrywide, said he has not yet decided if he supports a temporary freeze on foreclosures, saying it was far too complicated for quick judgment.

"It's really easy for Aguirre to make statements and what not," Brown said, "but we have to act in a responsible way."

Meanwhile, Greenlining Institute's General Counsel Robert Gnaizda expressed disappointment over the San Diego City Council's reluctance to act.

"The city council effectively tabled the resolution and definitely treated it as not an emergency," Gnaizda told Legal Newsline following the City Council meeting.

But Venus Molina, policy advisor to Councilman Andrew Young said the reinvestment task force has been treating this issue as an emergency for the last two years. Young, who co-chairs the task force, has led efforts that are helping keep people in their homes, Molina said.

"A lot of those things on the resolution are things we've already been working on," Molina told Legal Newsline on Tuesday. "It's been an emergency for a long time. People have been losing their homes dramatically starting two years ago. We've been doing things on the grassroots level, like funding the non-profits that are out doing home mortgage counseling and devising workouts with specific individuals."

Molina said the task force has helped numerous clinics in the city and county designed to educate homeowners on how to keep their homes. Attendance at the clinics ranges from 200 to 600 people, she said.

"More than 3,000 folks have been helped already," Molina said.

Molina said Young was slightly caught off guard by the city attorney's resolution.

"We've worked with the city attorney's office, so we were a little surprised this came up at the Council level. If anyone had the expertise and experience for this its Councilmember Young through the task force. We've done our homework."

Molina said the ideal situation would have been if Aguirre had first come to the task force for support, which could have "helped avoid a duplication of efforts."

But Gnaizda said the council succumbed to pressure from businesses rather than supporting homeowners in a time of crisis.

Molina said she wasn't aware of any pressure on the council from business leaders.
"If there's any pressure it has been from us asking 'hey what are you doing about this issue.' I think the pressure is the other way around," she said.

Gnaizda said the foreclosure freeze movement will continue at the local level as pressure for national progress continues to mount.

"More than 300 signatures have been gathered in Solano County," Gnaizda said, urging their local governments to consider passing similar resolutions that Aguirre proposed for San Diego. He said local organizations may still seek to pass a resolution in San Diego County, as a way of circumventing the council's decision.

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