California is one of the hardest hit by the mortgage crisis that is leading to hundreds of thousands of homeowners having their homes foreclosed. It is necessary to help them through basic mechanisms established in a settlement between 48 state attorneys general and five banking industry giants.
However, the legislative package Attorney General Kamala Harris presented this week to implement the settlement faced serious obstacles from the GOP caucus and Democrats with ties to the banking industry.
These groups oppose the bills, claiming that Harris took advantage of the situation to expand the regulation. They say the measures will increase the cost of borrowing, allow more lawsuits and permanently establish the clauses of a three-year settlement. The industry thinks permanent laws to resolve what they say were temporary abuses of the system are unnecessary.
In the past, these types of measures have been blocked, especially by Senator Juan Vargas (D-San Diego), who chairs the Banking and Financial Institutions Committee. This time, lawmakers tried to do the same, even when the bills implement a settlement made with members of the banking industry, mainly because they approved foreclosures without properly reviewing the documentation.
Given the outlook, Senate Democrats implemented a parliamentary maneuver to allow the bill package to move forward without having to go through legislative committees.
These laws are urgently needed. Estimates show that in California, half a million properties are in foreclosure proceedings and another half a million homeowners will be at risk in the next 18 months. Harris estimated that last year, there were 65,000 foreclosures in Los Angeles County, meaning 1 out of every 22 homes was in foreclosure. At the same time, Latinos have been the hardest hit in California, since many high-risk mortgages targeted this market.
This bill package must be approved right away. The commitment Senate leaders showed in seeking options to the obstruction, even by their own party’s lawmakers, deserves praise.
Today’s homeowners need help and tomorrow’s homeowners need protections to avoid a recurrence of the crisis. The state’s economy will benefit the most from this.