UPDATE – San Mateo County supervisors today unanimously approved a non-binding resolution calling for subprime mortgage lenders to agree to suspend foreclosures in the county for three months.
The resolution, introduced by Board of Supervisors President Rose Jacobs Gibson, came in response to the nationwide spike in foreclosures in the past year, correlating with a rise in subprime mortgages with higher rates and fees,according to Jacobs Gibson.
Foreclosures in San Mateo County in April of this year were more than six times the number in April 2006, according to Jacobs Gibson.
“Subprime loans have turned the dreams of home ownership into nightmares,” Jacobs Gibson said, adding that seniors and minorities “have been hit the hardest.”
“We're in troubling times with the lending situation the way it is,” Supervisor Jerry Hill said, lamenting “the lives that are being dislodged…the families that are being destroyed … the life savings that are being lost.”
Supervisor Adrienne Tissier noted that loan documents are often cumbersome for customers, and that lenders can be misleading.
“A lot of times, what's in that document is different from what you're being told,” Tissier said.
“This is a time to take a closer look at the lenders, and the real estate agents,” Tissier continued. Some loans “never should have happened,” she said.
Estela Baldovinos, of South San Francisco, attended this morning's hearing in support of the resolution, along with other members of the Association of Community Organizations for Reform Now.
Baldovinos told the supervisors that her mortgage broker lied to her about her adjustable rate mortgage and told her after two years, her mortgage would be lower.
Today, Baldovinos said, she is four months delinquent on her mortgage and struggles to care for her nine children while fending off calls from her lender.
“The past few months have been extremely stressful for me and my family,” Baldovinos said.
Foreclosures negatively impact not only families, but entire neighborhoods that become more vulnerable to crime, according to Jacobs Gibson.
ACORN members released a report today that claimed in addition to increases in violent crime and decreases in property values in neighborhoods beset by foreclosures, cities with high foreclosure rates lose property taxes that go to fund public schools, law enforcement and road repairs.
The report estimated that foreclosures from high-cost loans made in 2006 could cost San Francisco and San Mateo counties more than $210 million.
In addition to calling for a voluntary three-month moratorium on foreclosures from subprime lenders and agencies that service the loans, the resolution also asks lenders to help their customers avoid foreclosure during the moratorium period through interest rate or loan principal reductions.
The resolution also calls on lenders and loan servicers to make efforts during the three-month period to contact their customers and help them avoid foreclosure.
“We kind of have to get past the blame issue now,” Supervisor Mark Church said. “We need to encourage lenders to reach out and work with these people who are affected.”
Though supervisors plan to distribute copies of the resolution to various lenders throughout the county in the hope that they will comply, Jacobs Gibson acknowledged that the Board of Supervisors has “no real authority over lending institutions.”
Further, she said, the resolution “sends a message to the community that we are aware of the situation … and that we care about their situation.”
— Bay CIty News